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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
         Annual Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934


                   For the fiscal year ended December 31, 2001

                         Commission file number 0-26677

                      Insight Communications Company, Inc.
             (Exact name of registrant as specified in its charter)



              Delaware                                       13-4053502
   (State or other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                       Identification No.)

                               810 Seventh Avenue
                            New York, New York 10019
                    (Address of principal executive offices)

Registrant's telephone number, including area code: (917) 286-2300

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

Securities registered pursuant to Section 12(g) of the Act:

                      Class A Common Stock, $.01 Par Value
                                (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 this Form 10-K or any amendment to this
Form 10-K. (X)

     The aggregate market value of the common equity held by non-affiliates of
the registrant as of February 28, 2002 was approximately $1.0 billion.

     The number of shares of the registrant's common stock outstanding as of
February 28, 2002: 50,266,162 shares of Class A Common Stock and 9,977,537
shares of Class B Common Stock.

                      Documents Incorporated by Reference:

     Portions of the registrant's proxy statement for the 2002 Annual Meeting of
Stockholders are incorporated by reference into Part III.

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                                Table of Contents

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                                     PART I

Item 1.    Business ..................................................................      1
Item 2.    Properties ................................................................     33
Item 3.    Legal Proceedings .........................................................     34
Item 4.    Submission of Matters to a Vote of Security Holders .......................     34
Item 4A.   Executive Officers of the Registrant ......................................     35

                                   PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters .....     36
Item 6.    Selected Financial Data ...................................................     36
Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations .....................................................     39
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk ................     56
Item 8.    Financial Statements and Supplementary Data ...............................     57
Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure ......................................................     57

                                  PART III

Item 10.   Directors and Executive Officers of the Registrant ........................     58
Item 11.   Executive Compensation ....................................................     58
Item 12.   Security Ownership of Certain Beneficial Owners and Management ............     58
Item 13.   Certain Relationships and Related Transactions ............................     58

                                   PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K ..........     59

SIGNATURES ...........................................................................     63
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                           FORWARD-LOOKING STATEMENTS

           Some of the information in this report contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate" and "continue" or similar words. You should
read statements that contain these words carefully because they:

       .   discuss our future expectations;

       .   contain projections of our future results of operations or of our
           financial condition; or

       .   state other "forward-looking" information.

           We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
accurately predict or over which we have no control. The risk factors listed in
this report, as well as any other cautionary language in this report, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. You should be aware that the occurrence of the events described in
these risk factors and elsewhere in this report could have a material adverse
effect on our business, operating results and financial condition.

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                                     PART I

Item 1.  Business

             In this report, we rely on and refer to information and statistics
regarding the cable television industry and our market share in the sectors in
which we compete. We obtained this information and statistics from various
third-party sources, discussions with our customers and our own internal
estimates. We believe that these sources and estimates are reliable, but we have
not independently verified them and cannot guarantee their accuracy or
completeness.

General

             We are the eighth largest cable television system operator in the
United States based on customers served after giving effect to the pending
AT&T/Comcast merger transaction. We currently serve approximately 1.4 million
customers, 99% of which are concentrated in the four contiguous states of
Indiana, Kentucky, Illinois and Ohio. In addition to its geographic
concentration, our communications network is tightly-grouped, or "clustered,"
with approximately 95% of our customers served from fourteen headends after
giving effect to the network upgrades expected to be substantially completed
during 2002. As a result, the amount of capital necessary to deploy new and
enhanced products and services is significantly reduced on a per home basis
because of the large number of customers served by a single headend. A headend
processes signals received for distribution to customers over our network.
Clustering enables us to efficiently deploy a bundled suite of entertainment,
information and communications services. This combination of geographic
concentration and clustering has enabled us to offer, under the Insight Digital
brand, a complete bundle of interactive digital video, high-speed data access
and telephone services. We are a public company and our Class A common stock is
listed on The Nasdaq National Market under the symbol "ICCI." Our experienced
senior management team and members of their families own, in the aggregate, over
15% of our common stock.

             Insight Midwest, L.P. is a partnership owned 50% by us and 50% by
an indirect subsidiary of AT&T Broadband, LLC, which is a subsidiary of AT&T
Corp. Insight Midwest owns systems serving approximately 1.3 million of our
customers. AT&T recently entered into an agreement with Comcast Corporation to
merge their respective cable systems and certain other assets into a new
combined company to be known as AT&T Comcast Corporation. The transaction will
not result in any direct change in Insight Midwest's ownership structure, and
upon its completion we will continue to serve as the general partner of Insight
Midwest and as the manager of all of Insight Midwest's systems. Our 50% interest
in Insight Midwest constitutes substantially all of our operating assets. We
also manage additional systems in Indiana and Kentucky owned by an affiliate of
AT&T Broadband serving approximately 117,200 customers for which we receive a
management fee equal to 5% of the gross revenues of those systems.

             As a result of our upgrade efforts, as of the end of 2001, we
estimate that 95% of our customers (other than those served by our recently
acquired Illinois systems) were passed by our upgraded network, which enables
delivery of an advanced suite of entertainment, information and communications
services, including our interactive digital video, high-speed data access and
telephone services. Upon completion of our planned network upgrades during 2002,
over 99% of our customers (including the customers served by our recently
acquired Illinois systems) will be served by the upgraded network.

             To facilitate delivery of telephone services, we have entered into
a long-term agreement with AT&T Broadband that will allow Insight Midwest to
deliver to our customers local telephone service under the AT&T Digital Phone
brand. Under the terms of the agreement, Insight Midwest will lease for a fee
certain capacity on our network to AT&T Broadband. Insight Midwest will provide
certain services

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and support for which it will receive additional payments. The capital required
to deploy telephone services over our networks will be shared, with AT&T
Broadband responsible for switching and transport facilities. We believe that we
will be able to achieve higher penetration levels by marketing our telephone
services under the AT&T brand and leveraging AT&T's telephone expertise with our
strong local presence and established customer relationships.

        Consistent with our strategy of pursuing value-enhancing transactions
that fit our geographic and clustering strategy, on January 5, 2001, we
completed a series of transactions with certain cable subsidiaries of AT&T Corp.
that increased by 355,000 the number of customers we serve. We refer in this
report to these transactions, including related bank financing, as the "AT&T
transactions." Specifically, Insight Midwest acquired:

          .    all of our systems not already owned by Insight Midwest serving
               approximately 175,000 customers, as well as systems which we
               acquired from the AT&T cable subsidiaries serving approximately
               105,000 customers; and

          .    systems from the AT&T cable subsidiaries located in Illinois
               serving approximately 250,000 customers.

Insight Midwest acquired the systems from us and the AT&T cable subsidiaries
subject to indebtedness in the amount of $685.0 million.

        We are the largest operator of cable television systems in the State of
Indiana. As of December 31, 2001, the Indiana systems passed approximately
548,300 homes and served approximately 320,200 customers. The Indiana systems
are located primarily in the university cities of Bloomington, Evansville and
Lafayette and demographically desirable areas of suburban Indianapolis. Upon
completion of our consolidation of headends, we expect that approximately 99% of
the Indiana systems' customers will be served by three headends. The network
upgrades and consolidation of headends are expected to be substantially
completed during 2002.

        We are also the largest operator of cable television systems in the
State of Kentucky. As of December 31, 2001, the Kentucky systems passed
approximately 758,500 homes and served approximately 447,900 customers. Our
Kentucky systems are located in four of the five largest cities in the state:
Louisville, Lexington, Covington and Bowling Green. Approximately 99% of Insight
Kentucky's customers are served by four headends.

        As of December 31, 2001, the systems we manage for an affiliate of AT&T
Broadband passed approximately 187,600 homes and served approximately 117,200
customers. These managed systems are located adjacent to our existing Indiana
and Kentucky systems, and are operated by the employees of our existing systems.
This management arrangement expires on June 30, 2002.

        We are the second largest operator of cable television systems in the
State of Illinois. As of December 31, 2001, our Illinois systems passed
approximately 679,800 homes and served approximately 416,600 customers. The
Illinois systems are located primarily in mid-sized communities, including
Springfield, Rockford, Peoria and Champaign/Urbana. Upon completion of our
consolidation of headends, approximately 95% of the Illinois systems' customers
will be served by six headends. The network upgrades and consolidation of
headends are expected to be substantially completed during 2002.

        As of December 31, 2001, our Ohio system passed approximately 191,000
homes and served approximately 86,100 customers in the eastern portion of the
City of Columbus and the surrounding suburban communities. All of the Ohio
system's customers are served from a single headend.

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Approximately 83% of the Ohio system's customers are served by a network
upgraded to 870 MegaHertz (MHz) capacity, and our upgrade efforts are
continuing.

             We also own a cable television system in Griffin, Georgia which
passed approximately 23,200 homes and served approximately 12,900 customers as
of December 31, 2001. The Griffin system operates from a single headend.

             Recognizing the opportunities presented by newly available products
and services, the strength of our market characteristics and favorable changes
in the regulatory environment, we deployed a strategy to become a competitive,
full service provider of entertainment, information and communications services
for the communities served by our networks. We intend to continue capitalizing
on our highly clustered cable television systems to economically upgrade the
technological capabilities of our broadband networks in order to deploy enhanced
new services.

             We believe that an integrated package of existing multi-channel
video, new and enhanced products and services, such as interactive digital
video, including video-on-demand or near video-on-demand, high-speed Internet
access and telephone services, coupled with our commitment to locally focused
customer service, enhances our ability to acquire and retain customers in a
competitive environment while increasing revenues per customer. To augment this
growth, we will continue to seek strategic acquisitions that fit our clustering
and operating strategy.

             Our principal offices are located at 810 Seventh Avenue, New York,
New York 10019, and our telephone number is (917) 286-2300.

Strategy

             Our strategy is to be a competitive, full-service provider of
entertainment, information and communications services. This strategy is
centered on the deployment of new and enhanced products and services for the
communities served by our networks and consists of the following elements:

      Focus on operating large, tightly-grouped clusters of cable systems with
attractive technical and demographic profiles

             We operate large, tightly-grouped clusters of cable systems, most
of which have attractive technical and demographic profiles. Our systems are
characterized by high housing densities and high ratios of customers to
headends. As a result, the amount of capital necessary to deploy new and
enhanced products and services is significantly reduced on a per home basis
because of the large number of customers served by a single headend. We believe
that the highly clustered nature of our systems enables us to more efficiently
deploy our marketing dollars and maximize our ability to enhance customer
awareness, increase use of our products and services and build brand support.
Furthermore, our clustered systems, across 95% of our customers, providing for
headends serving an average of 100,000 customers upon completion of our planned
network upgrades, allow us to be capital efficient as we invest in necessary
technology. Our demographic profile is characterized by good housing growth and
low unemployment in growing communities, many of which are centered around large
universities and/or major commercial enterprises. We believe that households
with our demographic profile are more likely to subscribe to these new and
enhanced products and services than the national average demographic profile.

      Expeditiously upgrade our network

             We are upgrading our network expeditiously in order to provide new
and enhanced products and services, increase the programming and communications
choices for our customers, improve our

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competitive position and increase overall customer satisfaction. We are in the
process of upgrading almost all of our network to provide at least 750 MHz
capacity, or "bandwidth," and two-way active capability with 700 homes per fiber
node, which can be further subdivided four times. Nodes are the point of
interface between our headends and our network. The result will be a significant
increase in network capacity, quality and reliability which facilitates the
delivery of new and enhanced products and services and reduced operating costs.
Our aggressive investment in our broadband cable network upgrade allows us to
expeditiously offer these services to substantially all of our customers.

      Introduce new and enhanced products and services, including interactive
Insight Digital service, high-speed data service and telephone service

             Our marketing strategy is to offer our customers an array of
entertainment, information and communications services on a bundled basis. By
bundling our products and services, we provide our customers with an increased
choice of services in value-added packages, which we believe results in higher
customer satisfaction, increased use of our services and greater customer
retention. We have conducted research and held numerous focus group sessions in
our local markets, which lead us to believe that these services have high
customer appeal. We expect that our ability to provide bundled services will
provide us with a strong competitive advantage over alternative video providers,
such as direct broadcast satellite television systems, and incumbent telephone
companies. To accelerate the deployment of these services, we have entered into
arrangements and technical initiatives with several industry leaders, including:
(1) AT&T Broadband to provide telephone services; (2) AT&T Corp. and RoadRunner
to provide certain high-speed data services; (3) DIVA Systems Corporation to
provide video-on-demand; (4) Liberate Technologies to utilize its software
platform for the deployment of interactive television services; and (5)
SourceSuite LLC to provide an interactive program guide as well as local
information and community guides.

      Leverage strong local presence to enhance customer and community relations

             Excellent customer service is a key element of our strategy. We are
dedicated to quality customer service and seek a high level of customer
satisfaction by employing localized customer care, extensively using market
research and providing customers with an attractively priced product offering. A
significant number of our customers visit their local office on a monthly basis
providing us the opportunity to demonstrate and sell our new and enhanced
products and services. Our localized customer care initiatives create
substantial marketing and promotion opportunities, which we believe are
effective in the deployment of interactive, digital and high-speed data
products. We believe that we achieve customer satisfaction levels that are
substantially above industry averages. Annually, we commission Peter D. Hart
Research Associates to survey our customers with respect to service and product
knowledge. Based upon our most recent survey conducted in November 2001, our
customers continue to be highly satisfied with our service.

             In addition, we are dedicated to fostering strong relations in the
communities we serve. We sponsor local charities and community causes through
staged events and promotional campaigns, including the industry's Cable in the
Classroom program. Our emphasis on customer service and strong community
involvement has led to higher customer satisfaction, reduced customer churn and
excellent franchise relationships. To further strengthen community relations and
differentiate us from direct broadcast satellite television systems and other
multichannel video providers, we provide locally produced and oriented
programming that offers, among other things, community information, local
government proceedings and local specialty interest shows. In some of our
markets, we are the only broadcaster of local college and high school sporting
events, which allows us to provide important programming that builds customer
loyalty.

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      Pursue value-enhancing transactions in nearby or adjacent geographies

             To support our strategy, we intend to pursue value-enhancing
transactions. To augment our internal customer growth, we will seek to swap or
acquire systems that strategically fit our clustering and operating strategy. We
do not currently have any agreements, commitments or understandings for any
future acquisitions. There is no assurance that any additional acquisitions will
be completed. We believe that by acquiring or swapping systems in close
proximity we can improve revenue growth and operating margins. This is achieved
through the consolidation of headends and spread of fixed costs over larger
systems and the increase of operating efficiencies associated with larger
systems.

Technical Overview

             We believe that in order to achieve consistently high levels of
customer service, reduce operating costs, maintain a strong competitive position
and deploy important new technologies, we will need to install and maintain a
state-of-the-art technical platform. The deployment of cable which has a
capacity for a very large number of channels, known as fiber optic cable, an
increase in the bandwidth to 750 MHz or higher, the activation of a two-way
communications network and the installation of digital equipment will allow us
to deliver new and enhanced products and services, including interactive digital
video, high-speed data services and telephone services provided by AT&T
Broadband.

             As of December 31, 2001, our owned systems were comprised of 28,049
miles of network serving approximately 1.3 million customers and passing
approximately 2.2 million homes resulting in a density of approximately 78.5
homes per mile. As of that date, our owned systems were made up of an aggregate
of 63 headends. We intend to continue our strategy of consolidating headends by
eliminating approximately 42 headends, at which point 95% of our customers will
be served by fourteen headends. At the end of 2001, we estimate that 79% of our
customers were passed by our upgraded network. After completion of our planned
network upgrades, over 99% of our customers will be served by a network that is
two-way active and 750 MHz.

             Our network design calls for an analog and digital two-way active
network with fiber optic cable carrying signals from the headend to the
distribution point within our customers' neighborhoods. The signals are
transferred to our coaxial cable network at the node for delivery to our
customers. We have designed the fiber system to be capable of subdividing the
nodes if traffic on the network requires additional capacity.

             We believe that active use of fiber optic technology as a
supplement to coaxial cable plays a major role in expanding channel capacity and
improving the performance of our systems. Fiber optic strands are capable of
carrying hundreds of video, data and voice channels over extended distances
without the extensive signal amplification typically required for coaxial cable.
We will continue to deploy fiber optic cable to further reduce amplifier
cascades while improving picture quality and system reliability.

             A direct result of this extensive use of fiber optics is an
improvement in picture quality and a reduction of outages because system
failures will be both significantly reduced and will impact far fewer customers
when they do occur. Our design allows our systems to have the capability to run
multiple separate channel line-ups from a single headend and to insert targeted
advertisements into specific neighborhoods.

             To enable us to deliver telephone services, AT&T Broadband is
required to install and maintain the necessary switching and transport
facilities. Insight Midwest is required to deploy the necessary equipment at the
headends and at our customers' homes, and is responsible for expanding and
upgrading our network to provide the required capacity. We are increasing the
reliability of the services by

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implementing centralized powering and status monitoring on our networks as
telephone services are deployed in our systems. Centralized power provides the
reliability, including lifeline reliability, required in delivering telephone
services. The existing commercial power structure employed by cable networks is
subject to the general power disruptions experienced by the local power utility.
Centralized power will provide immediate battery back-up for a limited duration
followed by unlimited gas-powered generator back-up. This reliability will not
only benefit the delivery of telephone service, but also the reliability of the
other products and services delivered over the network. Status monitoring will
enable us to examine key components of our network so that we can diagnose
problems before they become critical and interfere with the stability of our
network.

Products and Services

       Traditional Cable Television Services

             We offer our customers a full array of traditional cable television
services and programming offerings. We tailor both our basic line-up and our
additional channel offerings to each regional system in response to
demographics, programming preferences, competition and local regulation. We
offer a basic level of service which includes up to 25 channels of television
programming. As of December 31, 2001, approximately 91.0% of our customers chose
to pay an additional amount to receive additional channels under our "Classic"
or "expanded" service. Premium channels, which are offered individually or in
packages of several channels, are optional add-ons to the basic service or the
classic service. As of December 31, 2001, premium units as a percentage of basic
subscribers was approximately 58.4%.

             Our analog cable television service offering includes the
following:

       .     Basic Service. All of our customers receive the basic level of
             service, which generally consists of local broadcast television and
             local community programming, including government and public
             access, and may include a limited number of satellite channels.

       .     Classic Service or Expanded Service. This expanded level of
             service includes a group of satellite-delivered or non-broadcast
             channels such as ESPN, CNN, Discovery Channel and Lifetime.

       .     Premium Channels. These channels provide unedited, commercial-free
             movies, sports and other special event entertainment programming
             such as HBO, Cinemax, Starz! and Showtime. We offer subscriptions
             to these channels either as a single channel analog service or as
             a multi-channel digital service.

       .     Pay-Per-View. These analog channels allow customers with
             addressable set top boxes to pay to view a single showing of a
             recently released movie or a one-time special sporting event or
             music concert on an unedited, commercial-free basis.

       New and Enhanced Products and Services

             As network upgrades have been activated, we deploy new and enhanced
products and services in most of our markets, including interactive digital
video and high-speed data services. In addition, we are offering telephone
services marketed under the AT&T Digital Phone brand.

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             Interactive Digital Video

             The implementation of interactive digital technology significantly
enhances and expands the video and service offerings we provide to our
customers. Most digital launches by other cable operators have been limited to
simply offering more channels as a defensive move against competition from
direct broadcast satellite television systems. Because of the significantly
increased bandwidth and two-way transmission capability of our state-of-the-art
technical platform, which continues to be built in conjunction with our digital
launches, we have designed a more extensive digital product that is rich in
program offerings and highly interactive with our customers. Our interactive
digital service is designed to exploit the advantages of a broadband network in
the existing generation of set-top devices. The digital service encompasses
three interactive applications: (1) an interactive program guide; (2)
interactive local information and community guides; and (3) a video-on-demand
service.

             We have conducted numerous focus groups and commissioned research
studies, the findings of which have helped to develop our interactive digital
strategy. We believe that our digital penetration will continue to increase as a
result of our differentiated services such as a graphically rich local
information network and video-on-demand pay-per-view with full VCR
functionality.

             We are packaging a "Digital Gateway" brand. For $7.95 per month,
our customers receive the following services:

      .      A digital set-top box;

      .      An interactive navigational program guide for all analog and
             digital channels;

      .      A local, interactive Internet-style information and entertainment
             service;

      .      A multi-channel premium service for customers who separately
             subscribe to premium channels, such as HBO and Showtime;

      .      Video-on-demand; and

      .      A digital 40-channel audio music service.

             We have entered into an agreement with Liberate Technologies that
enables us to utilize the Liberate software platform for the deployment of
interactive television services on the Motorola DCT-2000 and DCT-5000 digital
set-top boxes. The Liberate software provides the middleware component of our
interactive digital product. As of December 31, 2001, we deployed approximately
262,600 DCT-2000 set-top boxes with Liberate's C-Lite system. Our plan includes
the aggressive roll-out of these systems, and when the DCT-5000 becomes
available in commercial quantities, we intend to sell premium digital service
using the DCT-5000 and Liberate's middleware.

             We have also entered into an agreement with DIVA Systems
Corporation, which allowed us to become the first cable operator to offer DIVA's
video-on-demand services as part of a digital tier package. DIVA provides a true
video-on-demand service over the cable television infrastructure. Customers
receive the movies electronically over the network and have full VCR
functionality, including pause, play, fast forward and rewind. The movies are
delivered with a high quality digital picture and digital sound. DIVA is
designed to provide movies at prices comparable to those charged for videotape
rentals, pay-per-view and near video-on-demand movies, but with far greater
convenience and functionality.

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             On March 14, 2002, we purchased the remaining 50% equity interest
in SourceSuite LLC that we did not already own. Through SourceSuite, our
interactive digital platform provides its local Internet-style service and its
interactive program guide.

             Upon the completion of the network upgrades of the Indiana,
Kentucky and Illinois systems, we will continue to migrate the previous owners'
digital products to our interactive Insight Digital product. While the previous
owners' digital products were targeted to fill programming voids, our
interactive Insight Digital service is designed to provide our customers with an
Internet-style experience as well as enhanced programming choices, which have
resulted in higher penetration and customer satisfaction and reduced churn. Our
interactive Insight Digital service has experienced average penetration in the
Rockford, Illinois, Columbus, Ohio and Evansville, Indiana systems of between
22% and 34% since launch.

      High-Speed Data

             We offer high-speed data service for personal computers for all of
our upgraded systems through our own regional network branded InsightBB.com(SM),
except for our Columbus, Ohio system, which utilizes the RoadRunner service. We
have entered into a four-year agreement with AT&T Corp. under which AT&T will
provide the IP network backbone for our service and certain core Internet
support functions. This new arrangement replaces our previous Internet access
provider Excite@Home. We transitioned our customers from the Excite@Home network
to our new regional network in mid-February 2002. As of December 31, 2001,
high-speed data services were made available in 1.8 million of our homes and
served approximately 88,500 of our customers.

             The broad bandwidth of our cable network enables data to be
transmitted significantly faster than traditional telephone-based modem
technologies, and the cable connection does not interfere with normal telephone
activity or usage. For example, cable's on-line customers can download large
files from the Internet in a fraction of the time it takes when using any widely
available telephone modem technology. Moreover, surfing the Internet on a
high-speed network removes the long delays for Web pages to fully appear on the
computer screen, allowing the experience to more closely approximate the
responsiveness of changing channels on a television set. In addition, the cable
modem is always on and does not require the customer to dial into an Internet
service provider and await authorization. We believe that these factors of speed
and easy accessibility will increase the use and impact of the Internet.
Although other high-speed alternatives are being developed to compete with
cable, we believe that the cable platform currently is best able to deliver
these services.

      Telephone Services

             We have a long-term agreement with AT&T Broadband that allows
Insight Midwest to deliver local telephone service under the AT&T Digital Phone
brand using Insight Midwest's network infrastructure and AT&T Broadband's
switching and transport facilities. Insight Midwest leases certain capacity on
its network to AT&T Broadband for a monthly fee for each of the first four lines
ordered by a customer. Additionally, AT&T Broadband is required to pay Insight
Midwest a fee for each customer installation. Insight Midwest is compensated on
a per transaction basis for sales of AT&T Broadband services as AT&T Broadband's
agent. For Insight Midwest's provision of billing and collection services, AT&T
Broadband is required to pay it a monthly fee per customer. Insight Midwest is
also entitled to additional compensation if revenue exceeds the projected target
revenue for local service lines and features, such as enhanced caller ID or
voice mail.

             AT&T Broadband is the regulated telephone carrier for the telephone
services provided to our customers. The AT&T Broadband digital telephone
services are marketed and carried under the AT&T Digital Phone brand as part of
our bundle of Insight Digital services. Insight Midwest markets the services,

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as AT&T Broadband's agent, both on a stand-alone basis and bundled with our
other products and services, such as interactive digital video and high-speed
data access. Insight Midwest also bills our customers for AT&T Broadband's
services, as well as provides installation, maintenance and marketing support
for AT&T Broadband's services. Pursuant to the agreement, the services are to be
provided in the territories in which we currently provide cable television
service, other than our Illinois systems. If both parties agree, the agreements
can be expanded to include the Illinois systems. Telephone services have been
deployed in areas within Louisville, Kentucky and Evansville, Indiana and are
available to a total of approximately 210,000 households, with approximately
7,500 active customers. In addition, capital investment has been made in
preparation for the deployment of telephone services in Columbus, Ohio and
Lexington, Kentucky, with commercial launch expected early in 2002.

             The capital required to deploy telephone services over our networks
is a shared obligation. Insight Midwest is responsible for upgrading and
maintaining our network to meet specified measures of quality, including
increasing the capacity on our network to an average capacity of two lines per
residential household passed, assuming a specified service penetration rate.
Insight Midwest also acquires and installs equipment to be located at the
customer premises that is required to provide telephone services. We anticipate
AT&T Broadband will use portions of our network to permit AT&T Broadband to
offer an average of two telephone lines to each customer. AT&T Broadband is
responsible for switching and transport facilities. We believe that we will be
able to achieve higher penetration levels by marketing our telephone services
under the AT&T brand and leveraging AT&T's telephone expertise with our strong
local presence and established customer relationships.

Business Background

             We were co-founded in 1985 as a limited partnership under the name
Insight Communications Company, L.P. by Sidney R. Knafel and Michael S. Willner
after a previous association with one another at Vision Cable Communications
where Mr. Knafel was co-founder and Chairman and Mr. Willner held various
operating positions, ultimately holding the position of Executive Vice President
and Chief Operating Officer. Vision Cable was sold to The Newhouse Group Inc. in
1981 and Mr. Willner remained there to run the cable operations until 1985 when
he and Mr. Knafel formed Insight Communications.

             In addition to many years of conventional cable television
experience, our management team has been involved in the development and
deployment of full service communications networks since 1989. Through a then
related entity, Insight Communications Company UK, L.P., our management and
related parties entered the cable television market in the United Kingdom, where
today modern networks are widely deployed. Messrs. Knafel and Willner remain on
the board of NTL Incorporated, the publicly traded successor to the former
Insight UK related entity. NTL is currently the largest operator of local
broadband communications systems in the United Kingdom.

             As a result of our management's British experience, we recognized
that the technology and products developed in the United Kingdom would migrate
to the United States in similar form. We focused on planning to upgrade our
network promptly after it became clear that the 1996 Telecom Act would encourage
competition in the communications industries. We understood, however, that the
new products and services available with new technology were best deployed in
markets which provided for efficiencies for branding and technical investment.
Our original acquisition strategy, which focused on customer growth, was very
successful. However, our management team recognized the opportunity to evolve
from our role as a cable television operator providing only home video
entertainment into a full service alternative communications network providing
not only standard video services, but also interactive digital video, high speed
data access and communications products and services.

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             Recognizing the opportunities presented by newly available products
and services and favorable changes in the regulatory environment, we executed a
series of asset swaps, acquisitions and entered into several joint ventures that
resulted in our current composition. The largest of these transactions were the
50/50 joint ventures formed with AT&T Broadband and its affiliates in October
1998 with respect to the Indiana systems, in October 1999 with respect to the
Kentucky systems and on January 5, 2001 with respect to the Illinois systems. As
of December 31, 1997, our systems had approximately 180,000 customers with the
two largest concentrations in Utah and Indiana, which together represented less
than half of its customers. We believe that we have successfully transformed our
assets so that as of December 31, 2001, we owned, operated and managed a cable
television network serving approximately 1.4 million customers with
approximately 99% of our customers clustered in the contiguous states of
Indiana, Kentucky, Illinois and Ohio. Our current assets are reflective of our
strategy to own systems that have high ratios of customers to headends.

             In July 1999, the holders of the partnership interests of Insight
Communications Company, L.P. ("Insight LP") exchanged their respective
partnership interests for our common stock. As a result, Insight LP became our
wholly-owned subsidiary. Simultaneous with the exchange, we consummated an
initial public offering of 26,450,000 shares of our Class A common stock,
raising an aggregate of approximately $650.0 million. Our Class A common stock
is currently listed on The Nasdaq National Market under the symbol "ICCI."

Our Systems

             Our systems in Indiana, Kentucky, Illinois, Ohio and Georgia serve
approximately 1.4 million customers. We are the largest operator of cable
systems in both Indiana and Kentucky and the second-largest in Illinois. Our
systems are clustered or are capable of being clustered to serve an average of
100,000 customers per headend.

      We are able to realize significant operational synergies due to the size
of the clusters in these states and the demographic proximity of all of our
systems. In all of our systems, we have nearly completed upgrading our system
infrastructures to enable us to deliver new technologies, products and services
to provide our customers with greater value and choices in the face of growing
competition. The highly clustered nature of our systems enables us to (a) more
efficiently invest our marketing dollars and maximize our brand awareness, (b)
more economically introduce new and enhanced services, and (c) reduce our
overall operating and maintenance costs as a result of our ability to deploy
fiber and reduce the number of headends we use throughout our systems. As a
result, we believe we will be able to achieve improved operating performance on
both a combined and system-wide basis. Our relationship with AT&T Broadband
provides us with substantial purchasing economies for both our programming and
hardware needs.

      The Indiana Systems

             General

             As of December 31, 2001, the Indiana systems passed approximately
548,300 homes and served approximately 320,200 customers. This does not include
approximately 9,600 homes passed and approximately 5,100 customers served by
systems in Bloomington, Anderson and Cynthiana, which we acquired on January 1,
2002. The Indiana systems are owned by Insight Communications Midwest, which is
the largest cable operator in the state. Insight Communications Midwest, which
was capitalized on October 31, 1998, was a 50/50 joint venture between us and an
indirect subsidiary of AT&T Broadband until the contribution of its equity
interests on October 1, 1999 into Insight Midwest. We serve as manager

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of the Indiana systems. We believe that there are additional opportunities to
augment our position in Indiana through additional acquisitions and swaps.

             We believe that further upgrading of the Indiana systems will yield
opportunities for cash flow growth. We have increased our capital investments in
the Indiana systems, with initial emphasis on upgrading the network, activating
two-way transmission and combining headends. Upon completion of our
consolidation of headends, we expect that approximately 99% of our customers in
Indiana will be served by three headends. Upon implementation of our
state-of-the-art technical platform, we deploy new services based on our
marketing strategy of bundling products.

             We manage the day-to-day operations of Indiana and Kentucky cable
television systems owned by InterMedia Partners Southeast, an affiliate of AT&T
Broadband, which serve approximately 117,200 customers. The systems are operated
by employees of our Indiana and Kentucky systems, and the overhead for these
systems is allocated and charged against the cash flow of the managed systems.
This management arrangement expires on June 30, 2002.

             The Indiana systems are organized in four management districts:

             The Central District

             As of December 31, 2001, the Central District passed approximately
138,100 homes and served approximately 78,900 customers, principally in the
community of Bloomington. The City of Bloomington, located 45 miles south of
Indianapolis, is the home of Indiana University. Besides the University, major
employers include United Technology and General Electric. The median household
income for the area is approximately $37,000 per year, while the median family
income is approximately $47,500 per year. Household income differs from family
income by including income from all persons in all households, including persons
living alone and other non-family households.

             Digital video service was launched in Bloomington by AT&T Broadband
prior to the formation of Insight Communications Midwest. All Bloomington
digital customers have been migrated to our interactive Insight Digital service,
including the DIVA video-on-demand service. Our InsightBB.com high-speed
Internet service is also available in portions of the district. We expect to
substantially complete the upgrade of this district by the end of 2002.

             The Southwest District

             As of December 31, 2001, the Southwest District passed
approximately 126,300 homes and served approximately 59,300 customers,
principally in the communities of Evansville and Jasper. The median household
income for the area is approximately $36,500 per year, while the median family
income is approximately $47,000 per year. Major employers include Alcoa,
Whirlpool and Bristol-Myers Squibb.

             By the end of 2001, we completed the network upgrade of the
Southwest District to 750 MHz and we are currently migrating the digital
customers to our interactive Insight Digital service, including DIVA's
video-on-demand service and the LocalSource interactive information service. Our
InsightBB.com high-speed Internet service is available in Evansville. In
addition, AT&T Digital Phone service was launched in parts of Evansville in
August of 2001, with service expected to be available throughout most of the
district by the end of the second quarter of 2002.

             A related party of Southern Indiana Gas and Electric Co. has
overbuilt the City of Evansville. Southern Indiana Gas and Electric Co. has
obtained franchises to provide cable television service in the City of
Evansville and neighboring areas and commenced service in April 1999. We believe
the Southern

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Indiana Gas and Electric Co. overbuild passes approximately 77,100 homes in our
service area and is expected to pass additional homes, and has commenced
offering telephone and data service.

             The Northwest District

             As of December 31, 2001, the Northwest District passed
approximately 101,200 homes and served approximately 69,000 customers,
principally in the communities of Lafayette, Kokomo, Fowler and Hartford City.
The City of Lafayette is the home of Purdue University. Besides Purdue
University, major employers include Great Lakes Chemical, Lafayette Life
Insurance, General Motors and Delco Remy. The median household income for the
area is approximately $39,900 per year, while the median family income is
approximately $51,600 per year.

             The upgrades of the Lafayette and Kokomo systems to 750 MHz are
substantially completed. Our InsightBB.com high-speed Internet service is
available in all of these markets. AT&T Broadband launched a digital service in
the Kokomo market in late 1998. We are in the process of migrating those
customers to our digital service, simultaneous with the launch throughout the
district of our interactive Insight Digital service, including the LocalSource
products and DIVA's video-on-demand service.

             The Northeast District

             As of December 31, 2001, the Northeast District passed
approximately 182,700 homes and served approximately 113,000 customers in
Richmond as well as in the suburban communities near Indianapolis, including
Anderson and Noblesville. Indianapolis is the state capital of Indiana and is
the twelfth largest city in the United States. Major employers include General
Motors, Eli Lilly and Belden Wire and Cable. The median household income for the
area is approximately $46,700 per year, while the median family income is
approximately $56,300 per year.

             The upgrade of the Northeast District to 750 MHz was substantially
completed in 2001. Our InsightBB.com high-speed Internet service is available
throughout the district. AT&T Broadband launched digital service in several of
the markets in 1998, and we are in the process of migrating those customers to
our interactive Insight Digital service, simultaneous with the launch throughout
the district of our Insight Digital service, including the LocalSource product
and DIVA's video-on-demand service.

      The Kentucky Systems

             General

             As of December 31, 2001, the Kentucky systems passed approximately
758,500 homes and served approximately 447,900 customers. This includes
approximately 42,700 homes passed and approximately 21,700 customers served by
the Jeffersonville, Indiana system which is owned by Insight Communications
Midwest and operated by the management of the Louisville, Kentucky system. The
Kentucky systems are owned by Insight Kentucky Partners II, L.P., which is the
largest cable operator in the state. We acquired a combined 50% interest in
Insight Kentucky's parent on October 1, 1999, with related parties of AT&T
Broadband holding the other 50% interest. Simultaneous with this acquisition,
all of the equity interests were contributed into Insight Midwest. We serve as
manager of the Kentucky systems.

             Our Kentucky systems are located in and around four of the five
largest cities in the state: Louisville, Lexington, Covington, and Bowling
Green. Over 99% of Insight Kentucky's customers are served by a two-way active,
750 MHz network. Additionally, approximately 99% of the systems' customers are
served by four headends.

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             Summary statistics for the Kentucky systems are as follows:

             Louisville

             As of December 31, 2001, the Louisville system passed approximately
449,900 homes and served approximately 259,100 customers. Louisville is
Kentucky's largest city and is located in the northern region of the state,
bordering Indiana. Louisville is located within a day's drive of nearly 50% of
the United States population, which makes it an important crossroads for trade
and business. Major employers in the Louisville metropolitan area include
Humana, UPS, General Electric and Ford. The median household income for the area
is approximately $40,000 while the median family income is approximately
$48,500. Knology, Inc. and TotaLink of Kentucky, LLC have each obtained a
franchise to provide cable television service in the City of Louisville,
although neither has built a cable system as of December 31, 2001.

             The Louisville system substantially completed a network upgrade and
we serve substantially all of our customers with two-way, 750 MHz cable. The
system is also in the process of interconnecting six headends, which will allow
99% of the customers in the system to be served from a single headend.

             InterMedia Capital Partners VI, L.P. launched its digital service
in Louisville in November 1998. The service had approximately 62,600 customers
in Kentucky as of December 31, 2001. We are migrating these customers to our
interactive Insight Digital service, including the LocalSource product and the
DIVA video-on-demand service. Our InsightBB.com high-speed Internet service is
available in the Louisville system.

             Lexington

             As of December 31, 2001, the Lexington system passed approximately
124,600 homes and served approximately 85,000 customers from a single headend.
Lexington is Kentucky's second largest city, located in the central part of the
state. Major employers in the Lexington area include the University of Kentucky,
Toyota and Lexmark International. The median household income for the area is
approximately $44,000, while the median family income is approximately $56,000.

             The Lexington system has completed a network upgrade and we serve
all of our customers with two-way, 750 MHz cable. Our InsightBB.com high-speed
Internet service and Insight Digital service, including the LocalSource Product
and the DIVA video-on-demand service are available throughout the system.

             Covington

             As of December 31, 2001, the Covington system passed approximately
149,100 homes and served approximately 81,500 customers from a single headend.
Covington is Kentucky's fifth largest city. Major employers in the Covington
area include Delta Airlines, Toyota, Citicorp and DHL. The median household
income for the area is approximately $44,500, while the median family income is
approximately $53,800.

             The Covington system has completed a network upgrade and we serve
all of our customers with two-way, 750 MHz cable. Our InsightBB.com high-speed
Internet service and interactive Insight Digital service, including the
LocalSource product and the DIVA video-on-demand service are available in
Covington.

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             Bowling Green

             As of December 31, 2001, the Bowling Green system passed
approximately 34,900 homes and served approximately 22,300 customers from a
single headend. Bowling Green is located 120 miles south of Louisville, 110
miles southwest of Lexington and 70 miles north of Nashville, Tennessee. Bowling
Green is the fourth largest city in Kentucky and is the home of Western Kentucky
University. Major employers in the Bowling Green area include Fruit of the Loom,
Camping World, Desa International and Holley Replacement Parts. The median
household income for the area is approximately $36,500, while the median family
income is approximately $45,400.

             The Bowling Green system is fully upgraded to two-way, 750 MHz
cable. Our InsightBB.com high-speed Internet service and interactive Insight
Digital service, including the LocalSource product are available in Bowling
Green.

      The Illinois Systems

             The Illinois systems are owned and operated by Insight
Communications Midwest, and were contributed to Insight Communications Midwest
on January 5, 2001 pursuant to the AT&T transactions. We serve as manager of the
Illinois systems. These systems are located primarily in mid-sized communities,
including Springfield, Rockford, Peoria, Dixon and Champaign/Urbana. The
Rockford system was contributed by us and the other Illinois systems were
acquired from the AT&T cable subsidiaries pursuant to the AT&T transactions.

             In total, the Illinois systems passed approximately 679,800 homes
and served 416,600 customers as of December 31, 2001, making us the second
largest operator of cable television systems in the State of Illinois. These
systems are served by networks with approximately 3,312 miles having a capacity
greater than or equal to 750 MHz, 3,589 miles having a capacity greater than or
equal to 450 MHz and less than 750 MHz, and 846 miles having a capacity less
than 450 MHz. Consistent with our strategy of expeditiously upgrading our
network to facilitate the deployment of our enhanced products and services, we
are upgrading the network of the Illinois systems and intend to migrate the
digital customers to our interactive Insight Digital service. We expect to
invest approximately $56.0 million to upgrade these systems, and that the
upgrades will be substantially completed during 2002. In the interim, we will
launch Insight Digital on a node-by-node basis as system upgrades are completed.
We anticipate additional deployments of the DIVA video-on-demand service by the
end of 2002 in selected areas in the Illinois systems.

             The Illinois systems are organized in five management districts:

             The Rockford District

             As of December 31, 2001, the Rockford District passed approximately
129,200 homes and served approximately 78,900 customers. Rockford is Illinois'
second largest city. Major employers in the Rockford metropolitan area include:
Chrysler Corporation, Rockford Health System, Sundstrand Corporation and Swedish
American Health Systems. The median household income for the area is
approximately $39,300 per year, while the median family income is approximately
$47,800 per year.

             We completed the upgrade of the Rockford system and began launching
our Insight Digital service on a node-by-node basis as system upgrades were
completed beginning in February 1999. Since launching our Insight Digital
service in the Rockford system, the activated areas achieved approximately 22%
digital penetration from its customers, with incremental revenue per digital
customer of pproximately $21 per month. Our InsightBB.com high-speed Internet
service is available throughout the district.

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             The Peoria District

             As of December 31, 2001, the Peoria District passed approximately
199,000 homes and served approximately 124,400 customers, principally in the
communities of Bloomington and Peoria. Bloomington is located in the north
central part of the state. The Bloomington system is home to Illinois State
University with over 20,000 students and Illinois Wesleyan University with over
2,000 students. Peoria is the fourth largest city in Illinois, located in the
north central part of the state. Major employers in the Peoria area include
Maytag, Gates Rubber and the headquarters of Caterpillar. The median household
income for the area is approximately $26,000, while the median family income is
approximately $34,000.

             The Peoria system is currently undergoing a network upgrade from
550 MHz to 860 MHz, which is expected to be completed during 2002. As of
December 31, 2001, the Peoria District achieved penetration levels for its
digital service of nearly 17% in areas where digital service is available. We
continue to migrate these customers to our interactive Insight Digital service,
including the Local Source product and the DIVA video-on-demand service during
2002. The system has launched high-speed data service and has achieved
penetration levels of over 9% as of December 31, 2001.

             The Dixon District

             As of December 31, 2001, the Dixon District passed approximately
67,700 homes and served approximately 45,600 customers, principally in the
communities of Rock Falls, Peru and Dixon. Dixon is located in the north/central
part of the State of Illinois. Major employers in the Dixon area include the
State of Illinois, Raynor Manufacturing Company and Borg Warner Automotive. The
median household income for the area is approximately $25,200, while the median
family income is approximately $30,700.

             The Dixon system currently operates with a 750 MHz network, with
areas within the Dixon District undergoing a network upgrade from 450 MHz to 860
MHz, which is expected to be completed substantially by the end of 2002. As of
December 31, 2001, the district achieved penetration levels for its digital
service of nearly 14% in areas where the service is available. We continue to
migrate these customers to our interactive Insight Digital service, including
the LocalSource product and the InsightBB.com high-speed Internet service during
2002.

             The Springfield District

             As of December 31, 2001, the Springfield District passed
approximately 186,100 homes and served approximately 116,500 customers,
principally in the communities of Decatur and Springfield. This includes
approximately 9,800 homes passed and approximately 4,400 customers served by
systems in Chatham, Divernon and Pawnee, which we acquired on October 1, 2001.
Springfield is the capital of Illinois and the third largest city in the state,
located in the central part of the state. The major employer in the Springfield
area is the State of Illinois. The median household income for the area is
approximately $28,000, while the median family income is approximately $36,500.
The City of Springfield is considering a municipal overbuild utilizing an
existing plant owned by the city.

             The Springfield District is currently undergoing a network upgrade
from 450 MHz to two-way, 750 MHz. As of December 31, 2001, the district achieved
penetration levels for its digital service of over 20% in the areas where the
service is available. We continue to migrate these customers to our interactive
Insight Digital service, including the Local Source product and the DIVA
video-on-demand service, by the end of 2002. The system is currently rolling out
the InsightBB.com high-speed Internet service on a node-by-node basis.

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             The Champaign District

             As of December 31, 2001, the Champaign District passed
approximately 97,800 homes and served approximately 51,300 customers.
Champaign/Urbana is located in the eastern central part of the state. The
Champaign District is home to the University of Illinois with over 36,000
students. Major employers in the Champaign and Urbana areas include the
University of Illinois, Kraft Foods and the Carle Clinic Association. The median
household income for the area is approximately $22,300 and the median family
income for the area is approximately $34,000.

             The Champaign District serves substantially all of its customers by
a two-way, 750 MHz network. The district had approximately 6,400 digital
customers as of December 31, 2001. We continue to migrate these customers to our
interactive Insight Digital service, including the Local Source service and the
DIVA video-on-demand service, by the end of 2002. The Champaign District has
launched high-speed data service and as of December 31, 2001 had over 7,700
customers.

      The Griffin, Georgia System

             The Griffin, Georgia system is owned and operated by Insight
Communications Midwest, and was contributed to Insight Midwest on January 5,
2001 pursuant to the AT&T transactions. We serve as manager of the Griffin
system. As of December 31, 2001, the Griffin, Georgia system passed
approximately 23,200 homes and served approximately 12,900 customers from a
single headend. Major employers in the area include Springs Industries, North
American Component Manufacturing and William Carter Apparel. The median
household income for the area is approximately $34,700 per year, while the
median family income is approximately $40,500 per year.

             We launched our digital service in the Griffin system in December
1998, bringing many new entertainment options to its customers. Griffin, being a
smaller market that still has unused channel capacity, has a scaled-down version
of the Insight Digital service, similar to the full digital service except that
it is not interactive. Despite a more limited product offering, we have achieved
significant success with nearly 20% penetration as of December 31, 2001. The
Griffin launch was the first digital deployment of our multi-tiered approach in
the country. During 2002, we will upgrade the Griffin system to enhance the
digital service.

      The Ohio System

             In connection with the AT&T transactions, the common equity of
Insight Communications of Central Ohio, LLC, the entity holding the Ohio system,
was contributed to Insight Midwest. As of December 31, 2001, the Ohio system
passed approximately 191,000 homes and served approximately 86,100 customers
from a single headend. The system serves the eastern portion of the City of
Columbus and adjacent suburban communities within eastern Franklin County and
the contiguous counties of Delaware, Licking, Fairfield and Pickaway. The City
of Columbus is the 34th largest designated market area, the capital of Ohio and
the home of Ohio State University. In addition to the state government and
university, the Columbus economy is well diversified with the significant
presence of prominent companies such as The Limited, Merck, Wendy's, Nationwide
Insurance, Borden and Worthington Industries. The area's strong economy provides
for a well-paid employment base with a current unemployment rate of
approximately 3.1%. The median household income for our service area is
approximately $47,800 per year, while the median family income is approximately
$57,000 per year.

             We are currently upgrading the Ohio system to 870 MHz, and began
servicing customers from our upgraded network in November 1999. We are currently
launching our interactive Insight Digital service, on a node-by-node basis,
including DIVA's video-on-demand service and the LocalSource

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interactive information service. As of December 31, 2001, approximately 22,600
customers have subscribed to our interactive digital service, representing a
penetration of nearly 34%. The RoadRunner high-speed data service, launched in
2000, has achieved a penetration of 7.3% as of December 31, 2001. In addition,
the Ohio system provides exclusive sports programming under the "Central Ohio
Sport!" brand, featuring sporting events from Ohio State University.

             In 1996, Ameritech obtained a citywide cable television franchise
for the City of Columbus and suburban communities in Franklin County.
WideOpenWest acquired the assets of Ameritech in December 2001, and has built
its citywide franchise, both in our service area and in the Time Warner service
area on the west side of Columbus. We and Time Warner service virtually distinct
areas and therefore do not compete with one another. The areas of the Ohio
system served by both us and WideOpenWest pass approximately 130,000 homes,
representing 68.1% of the Ohio system's total homes passed.

             As with our Indiana, Kentucky and Illinois systems, we intend to
launch a telephone service alternative to WideOpenWest through the arrangement
with AT&T Broadband. Time Warner, the other major cable television provider in
the market, also has previously announced that it is negotiating a telephone
services agreement with AT&T Broadband.

Customer Rates

             Rates charged to customers vary based on the market served and
service selected. As of December 31, 2001, the weighted average revenue for our
monthly combined basic and classic service was approximately $30.97. The
national average was estimated to be $31.58 for the same services as of December
31, 2001, as reported by Paul Kagan & Associates.

             A one-time installation fee, which we may reduce during promotional
periods, is charged to new customers, as well as reconnected customers. We
charge monthly fees for set top boxes and remote control devices. We also charge
administrative fees for delinquent payments for service. Customers are free to
discontinue service at any time without additional charge and may be charged a
reconnection fee to resume service. Commercial customers, such as hotels, motels
and hospitals, are charged negotiated monthly fees and a non-recurring fee for
the installation of service. Multiple dwelling unit accounts may be offered a
bulk rate in exchange for single-point billing and basic service to all units.

Sales and Marketing

             Our strategy is to sell multiple services to our customers,
including video, high-speed data and telephone services. Customers who purchase
more than one service are eligible for a bundled discount. We regularly use
targeted campaigns to sell the appropriate services to both our existing and our
potential customer base. Our customer service representatives are trained and
given the support to use their daily contacts with customers as opportunities to
sell our new service offerings.

             Due to the nature of the communities we serve, we are able to
market our services in ways not typically used by urban cable operators. We can
market products and services to our customers at our local offices where many of
our customers pay their cable bills in person. Examples of our in-store
marketing include the promotion of premium services as well as point-of-purchase
demonstrations that will allow customers to experience our high-speed Internet
service and digital products. We aggressively promote our services utilizing
both broad and targeted marketing tactics, including outdoor billboards,
outbound telemarketing, retail partnerships, direct mail, door-to-door sales,
cross-channel promotion, print and broadcast.

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             We build awareness of the Insight Communications brand through
advertising campaigns and strong community relations. As a result of our
branding efforts and consistent service standards, we believe we have developed
a reputation for quality and reliability. We also believe that our marketing
strategies are particularly effective due to our regional clustering and market
significance, which enables us to reach a greater number of both current and
potential customers in an efficient, uniform manner.

Programming Suppliers

             Most cable companies purchase their programming product directly
from the program networks by entering into a contractual relationship with the
program supplier. The vast majority of these program suppliers offer the cable
operator license fee rate cards with size-based volume discounts and other
financial incentives, such as launch and marketing support and cross-channel
advertising.

             Currently there are over 160 cable networks competing for carriage
on our analog and digital platforms. We have continued to leverage both our
systems' analog upgrades and newly deployed digital packages as an incentive to
our suppliers to secure long term programming deals with reasonable price
structures and other creative financial arrangements to offset license fee
increases.

             Because of our relationship with AT&T Broadband, we have the right
to purchase programming services for our systems directly through AT&T
Broadband's programming supplier Satellite Services, Inc. We believe that
Satellite Services has attractive programming costs. Additionally, given the
clustering of our systems in the Midwest, we have been successful in affiliating
with regionally based programming products such as sports and news, at lower
than average license fees.

Commitment to Community Relations

             We believe that maintaining strong community relations will
continue to be an important factor in ensuring our long-term success. Our
community-oriented initiatives include educational programs and the sponsorship
of programs and events recognizing local citizens. In addition, members of our
management team host community events for political and business leaders as well
as representatives of the local media, where they discuss our operations and
recent developments in the telecommunications industry. We have received
numerous awards recognizing our ongoing community relations, and we believe that
such initiatives result in consumer and governmental goodwill and name
recognition, increasing customer loyalty and likely facilitating any future
efforts to provide new communications services.

             We encourage all of our local management teams to take leadership
roles in community and civic activities. Over the years, our systems have
received numerous awards in recognition of their efforts to support local causes
and charities as well as programs that encourage a better way of life in the
communities they serve.

             Cable industry recognition and awards for excellence in marketing
and programming have been received by several of our systems.

             All of our systems provide ongoing support for Cable in the
Classroom, an industry initiative that earns recognition both locally and
nationally for its efforts in furthering the education of children. Our newest
public affairs initiative, "In the Know," further underscores our commitment to
education by bringing the vast uses of high-speed Internet access into each
accredited school in our service area. "In the Know" builds upon the cable
industry's pledge to provide free high-speed Internet access to local schools.
We have taken that pledge a step further to offer students and teachers the
resources of broadband content and robust cable programming to enrich the
learning experience.

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        With cable modems in the classroom, teachers and students alike can
benefit from the speedy downloads and access to advanced applications to enhance
the learning experience. In addition to providing this advanced technology free
of charge, we intend to introduce programming enhancements in partnership with
various cable networks. As an increasing number of areas become serviceable for
high-speed service, "In the Know" is designed to incorporate multi-faceted
synergies with these programmers in order to provide specialized educational
offerings for each of our systems.

        In 2001, our Louisville, Kentucky system partnered with Oxygen Media to
form "The Young Women's Technology Fellowship" as part of our "In the Know"
efforts. This program was a synergy of the common goals between Insight and
Oxygen in order to address the issue of the digital divide through cable's
robust resources. The Fellowship provided advanced training and resources to 12
motivated young women most in need. This program received a great deal of
recognition both locally and industry-wide, including a 2002 Beacon Award by the
Cable Television Public Affairs Association.

        One of the advantages a local cable operator has over nationally
distributed competitors is its ability to develop local programming. To further
strengthen community relations and differentiate us from direct broadcast
satellite television systems and other multichannel video providers, we provide
locally produced and oriented programming. Several of our systems have full
production capabilities, with in-house and/or mobile production studios to
create local content. To attract viewers, we offer a broad range of local
programming alternatives, including community information, local government
proceedings and local specialty interest shows. In some of our markets, we are
the exclusive broadcaster of local college and high school sporting events,
which we believe provides unique programming and builds customer loyalty. We
believe that our emphasis on local programming creates significant opportunities
for increased advertising revenues. Locally originated programming will also
play an integral role in the deployment of our new and enhanced products and
services.

Franchises

        Cable television systems are constructed and operated under fixed-term
non-exclusive franchises or other types of operating authorities that are
granted by either local governmental or centralized state authorities. These
franchises typically contain many conditions, such as:

   .    Time limitations on commencement and completion of construction;

   .    Conditions of service, including the number of channels, the provision
        of free service to schools and other public institutions;

   .    The maintenance of insurance and indemnity bonds; and

   .    The payment of fees to communities.

        These local franchises are subject to limits imposed by federal law.

        As of December 31, 2001, we held 597 franchises in the aggregate,
consisting of 238 in Indiana, 202 in Kentucky, 124 in Illinois, 29 in Ohio and 4
in Georgia. Many of these franchises require the payment of fees to the issuing
authorities of 3% to 5% of gross revenues, as defined by each franchise
agreement, from the related cable system.

        The 1984 Cable Act prohibits franchising authorities from imposing
annual franchise fees in excess of 5% of gross annual revenues and also permits
the cable television system operator to seek

                                       19

<PAGE>


renegotiation and modification of franchise requirements if warranted by changed
circumstances that render performance commercially impracticable.

             The following table summarizes information relating to the year of
expiration of our franchises, excluding the managed systems, as of December 31,
2001:

<TABLE>
<CAPTION>
             Year of              Number of         Percentage of           Number of          Percentage Total
      Franchise Expiration       Franchises       Total Franchises       Basic Customers       Basic Customers
      --------------------       ----------       -----------------      ---------------       ---------------
<S>                              <C>              <C>                    <C>                   <C>
Expired* ......................        32               6.2%                  99,207                7.7%
2002 ..........................        27               5.2                   38,936                3.0
2003 ..........................        49               9.5                   96,330                7.5
2004 ..........................        35               6.8                   44,637                3.5
2005 ..........................        38               7.4                   93,665                7.3
After 2005 ....................       336              64.9                  910,916               71.0
</TABLE>

             The following table summarizes information relating to the year of
expiration of our franchises, including the managed systems, as of December 31,
2001:

<TABLE>
<CAPTION>
             Year of              Number of         Percentage of            Number of         Percentage Total
      Franchise Expiration       Franchises       Total Franchises        Basic Customers      Basic Customers
      --------------------       ----------       -----------------       ---------------      ---------------
<S>                              <C>              <C>                     <C>                  <C>
Expired* ......................      47                7.9%                 117,678                 8.4%
2002 ..........................      32                5.4                   49,972                 3.6
2003 ..........................      55                9.2                  114,312                 8.2
2004 ..........................      40                6.7                   51,975                 3.7
2005 ..........................      43                7.2                   96,544                 6.9
After 2005 ....................     380               63.6                  970,370                69.2
</TABLE>

_________

* Such franchises are operated on a month-to-month basis and are in the process
of being renewed.

             The Cable Acts provide, among other things, for an orderly
franchise renewal process which limits a franchising authority's ability to deny
a franchise renewal if the incumbent operator follows prescribed renewal
procedures. In addition, the Cable Acts established comprehensive renewal
procedures which require, when properly elected by an operator, that an
incumbent franchisee's renewal application be assessed on its own merits and not
as part of a comparative process with competing applications.

             We believe that our cable systems generally have good relationships
with their respective franchise authorities. We have never had a franchise
revoked or failed to have a franchise renewed.

Competition

             Cable systems face increasing competition from alternative methods
of receiving and distributing their core video business. Both wireline and
wireless competitors have made inroads in competing against incumbent cable
operators. The extent to which a cable operator is competitive depends, in part,
upon its ability to provide to customers, at a reasonable price, a greater
variety of programming and other communications services than are available
off-air or through alternative delivery sources and upon superior technical
performance and customer service.

             Congress has enacted legislation and the FCC has adopted regulatory
policies providing a more favorable operating environment for new and existing
technologies, in particular direct broadcast satellite television systems
operators, that have the potential to provide increased competition to cable
systems.

                                       20

<PAGE>

Congress has also enacted legislation which permits direct broadcast satellite
companies to retransmit local television signals, eliminating one of the
objections of consumers about switching to satellites.

             The 1996 Telecom Act makes it easier for local exchange telephone
companies and others to provide a wide variety of video services competitive
with services provided by cable systems. Various local exchange telephone
companies currently are providing video services within and outside their
telephone service areas through a variety of distribution methods, including the
deployment of broadband cable networks and the use of wireless transmission
facilities. Local exchange telephone companies in various states have either
announced plans, obtained local franchise authorizations or are currently
competing with our cable communications systems. Local exchange telephone
companies and other companies also provide facilities for the transmission and
distribution to homes and businesses of interactive computer-based services,
including the Internet, as well as data and other non-video services. The
ability of local exchange telephone companies to cross-subsidize video, data and
telecommunication services also poses some threat to cable operators.

             Franchised cable systems compete with private cable systems for the
right to service condominiums, apartment complexes and other multiple unit
residential developments. The operators of these private systems, known as
satellite master antenna television systems often enter into exclusive
agreements with apartment building owners or homeowners' associations that
preclude franchised cable television operators from serving residents of such
private complexes. However, the 1984 Cable Act gives franchised cable operators
the right to use existing compatible easements within their franchise areas on
nondiscriminatory terms and conditions. Accordingly, where there are preexisting
compatible easements, cable operators may not be unfairly denied access or
discriminated against with respect to access to the premises served by those
easements. Conflicting judicial decisions have been issued interpreting the
scope of the access right granted by the 1984 Cable Act, particularly with
respect to easements located entirely on private property.

             The 1996 Telecom Act may exempt some of our competitors from
regulation as cable systems. The 1996 Telecom Act amends the definition of a
"cable system" such that providers of competitive video programming are only
regulated and franchised as "cable systems" if they use public rights-of-way.
Thus, a broader class of entities providing video programming, including
operators of satellite master antenna television systems, may be exempt from
regulation as cable television systems under the 1996 Telecom Act. This
exemption may give these entities a competitive advantage over us.

             Cable television systems are operated under non-exclusive
franchises granted by local authorities thereby allowing more than one cable
system to be built in the same area. Although the number of municipal and
commercial overbuild cable systems is small, the potential profitability of a
cable system is adversely affected if the local customer base is divided among
multiple systems. Additionally, constructing a competing cable system is a
capital intensive process which involves a high degree of risk. We believe that
in order to be successful, a competitor's overbuild would need to be able to
serve the homes in the overbuilt area on a more cost-effective basis than we
can. Any such overbuild operation would require either significant access to
capital or access to facilities already in place that are capable of delivering
cable television programming. As of December 31, 2001, our Evansville, Indiana
and Columbus, Ohio systems were overbuilt. As a result, approximately 8.7% of
the total homes passed by our systems were overbuilt as of such date.

             Direct broadcast satellite television systems use digital video
compression technology to increase the channel capacity of their systems. Direct
broadcast satellite television systems' programming is currently available to
individual households, condominiums and apartment and office complexes through
conventional, medium and high-power satellites. High-power direct broadcast
satellite television

                                       21

<PAGE>

system service is currently being provided by DIRECTV, Inc., and EchoStar
Communications Corporation. Direct broadcast satellite television systems have
some advantages over cable systems that were not upgraded, such as greater
channel capacity and digital picture quality. In addition, legislation has been
enacted which permits direct broadcast satellite television systems to
retransmit the signals of local television stations in their local markets.
However, direct broadcast satellite television systems have a limited ability to
offer locally produced programming, and do not have a significant local presence
in the community. In addition, direct broadcast satellite television systems
packages can be more expensive than cable, especially if the subscriber intends
to view the service on more than one television in the household. Finally,
direct broadcast satellite television systems do not have the same full two-way
capability, which we believe will limit their ability to compete in a meaningful
way in interactive television, high-speed data and voice communications. Direct
broadcast satellite has enjoyed a 17.5% average penetration nationwide, and we
believe that satellite penetration in our various markets generally is in
accordance with such average.

             Several telephone companies are introducing digital subscriber line
technology, which allows Internet access over traditional phone lines at data
transmission speeds greater than those available by a standard telephone modem.
Although these transmission speeds are not as great as the transmission speeds
of a cable modem, we believe that the transmission speeds of digital subscriber
line technology are sufficiently high that such technology will compete with
cable modem technology. The FCC is currently considering its authority to
promulgate rules to facilitate the deployment of these services and regulate
areas including high-speed data and interactive Internet services. We cannot
predict the outcome of any FCC proceedings, or the impact of that outcome on the
success of our Internet access services or on our operations.

             Additionally, the FCC adopted regulations allocating frequencies in
the 31 GigaHertz (GHz) band for a new service that can be used to provide video
services similar to multipoint multichannel distribution systems, which transmit
television channels from a fixed station to multiple receiving facilities
located at fixed points. The FCC has completed spectrum auctions for local
multipoint distribution service licenses.

             As we expand our offerings to include telephone services, our AT&T
Digital Phone branded services will be subject to competition from existing
providers, including both local exchange telephone companies and long-distance
carriers. The telecommunications industry is highly competitive and many
telephone service providers may have greater financial resources than we have,
or have established relationships with regulatory authorities. We cannot predict
the extent to which the presence of these competitors will influence customer
penetration in our telephone service areas. While we intend to add our telephone
service offering to our various markets, the service has only recently been
launched in selected markets and has not yet achieved any material penetration
levels.

             Other new technologies may become competitive with services that
cable communications systems can offer. Advances in communications technology,
as well as changes in the marketplace and the regulatory and legislative
environment are constantly occurring. Thus, we cannot predict the effect of
ongoing or future developments on the cable communications industry or on our
operations.

Legislation and Regulation

             The cable television industry is regulated by the FCC, some state
governments and the applicable local governments. In addition, various
legislative and regulatory proposals under consideration from time to time by
Congress and various federal agencies have in the past, and may in the future,
materially affect us. The following is a summary of federal laws and regulations
materially affecting the growth and operation of the cable television industry
and a description of certain state and local laws. We

                                       22

<PAGE>

believe that the regulation of the cable television industry remains a matter of
interest to Congress, the FCC and other regulatory authorities. There can be no
assurance as to what, if any, future actions such legislative and regulatory
authorities may take or the effect thereof on us.

             Federal Legislation

             The principal federal statute governing the cable television
industry is the Communications Act. As it affects the cable television industry,
the Communications Act has been significantly amended on three occasions, by the
1984 Cable Act, the 1992 Cable Act and the 1996 Telecom Act. The 1996 Telecom
Act altered the regulatory structure governing the nation's telecommunications
providers. It removed barriers to competition in both the cable television
market and the local telephone market. Among other things, it also reduced the
scope of cable rate regulation.

             Federal Regulation

             The FCC, the principal federal regulatory agency with jurisdiction
over cable television, has adopted regulations covering such areas as
cross-ownership between cable television systems and other communications
businesses, carriage of television broadcast programming, cable rates, consumer
protection and customer service, leased access, indecent programming, programmer
access to cable television systems, programming agreements, technical standards,
consumer electronics equipment compatibility, ownership of home wiring, program
exclusivity, equal employment opportunity, consumer education and lockbox
enforcement, origination cablecasting and sponsorship identification, children's
programming, signal leakage and frequency use, maintenance of various records,
and antenna structure notification, marking and lighting. The FCC has the
authority to enforce these 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. A brief summary of certain of these federal regulations as adopted
to date follows.

             Rate Regulation

             The 1984 Cable Act codified existing FCC preemption of rate
regulation for premium channels and optional non-basic program tiers. The 1984
Cable Act also deregulated basic cable rates for cable television systems
determined by the FCC to be subject to effective competition. The 1992 Cable Act
substantially changed the previous statutory and FCC rate regulation standards.
The 1992 Cable Act replaced the FCC's old standard for determining effective
competition, under which most cable television systems were not subject to rate
regulation, with a statutory provision that resulted in nearly all cable
television systems becoming subject to rate regulation of basic service. The
1996 Telecom Act expanded the definition of effective competition to cover
situations where a local telephone company or its affiliate, or any multichannel
video provider using telephone company facilities, offers comparable video
service by any means except direct broadcast satellite television systems.
Satisfaction of this test deregulates all rates.

             For cable systems not subject to effective competition, the 1992
Cable Act required the FCC to adopt a formula for franchising authorities to
assure that basic cable rates are reasonable; allowed the FCC to review rates
for cable programming service tiers, other than per-channel or per-program
services, in response to complaints filed by franchising authorities and/or
cable customers; prohibited cable television systems from requiring basic
customers to purchase service tiers above basic service in order to purchase
premium services if the system is technically capable of compliance; required
the FCC to adopt regulations to establish, on the basis of actual costs, the
price for installation of cable service, remote controls, converter boxes and
additional outlets; and allowed the FCC to impose restrictions on the retiering
and rearrangement of cable services under certain limited circumstances. The
1996 Telecom Act limited the

                                       23

<PAGE>

class of complainants regarding cable programming service tier rates to
franchising authorities only, and ended FCC regulation of cable programming
service tier rates on March 31, 1999. The 1996 Telecom Act also relaxes existing
uniform rate requirements by specifying that such requirements do not apply
where the operator faces effective competition, and by exempting bulk discounts
to multiple dwelling units, although complaints about predatory pricing may be
lodged with the FCC.

          The FCC's implementing regulations contain standards for the
regulation of basic service rates. Local franchising authorities are empowered
to order a reduction of existing rates which exceed the maximum permitted level
for basic services and associated equipment, and refunds can be required. The
FCC adopted a benchmark price cap system for measuring the reasonableness of
existing basic service rates. Alternatively, cable operators have the
opportunity to make cost-of-service showings which, in some cases, may justify
rates above the applicable benchmarks. The rules also require that charges for
cable-related equipment, converter boxes and remote control devices, for
example, and installation services be unbundled from the provision of cable
service and based upon actual costs plus a reasonable profit. The regulations
also provide that future rate increases may not exceed an inflation-indexed
amount, plus increases in certain costs beyond the cable operator's control,
such as taxes, franchise fees and increased programming costs. Cost-based
adjustments to these capped rates can also be made in the event a cable
television operator adds or deletes channels. There is also a streamlined
cost-of-service methodology available to justify a rate increase on the basic
tier for "significant" system upgrades.

          As a further alternative, in 1995 the FCC adopted a simplified
cost-of-service methodology which can be used by "small cable systems" owned by
"small cable companies." A "small system" is defined as a cable television
system which has, on a headend basis, 15,000 or fewer basic customers. A "small
cable company" is defined as an entity serving a total of 400,000 or fewer basic
customers that is not affiliated with a larger cable television company, that is
to say that a larger cable television company does not own more than a 20
percent equity share or exercise de jure control. This small system rate-setting
methodology almost always results in rates that exceed those produced by the
cost-of-service rules applicable to larger cable television operators. Once the
initial rates are set they can be adjusted periodically for inflation and
external cost changes as described above. When an eligible "small system" grows
larger than 15,000 basic customers, it can maintain its then current rates but
it cannot increase its rates in the normal course until an increase would be
warranted under the rules applicable to systems that have more than 15,000
customers. When a "small cable company" grows larger than 400,000 basic
customers, the qualified systems it then owns will not lose their small system
eligibility. If a small cable company sells a qualified system, or if the
company itself is sold, the qualified systems retain that status even if the
acquiring company is not a small cable company. We were a "small cable company"
prior to the October 30, 1998 completion of the AT&T Broadband transaction but
we no longer enjoy this status and as a result, we are no longer entitled to
this benefit. However, as noted above, the systems with less than 15,000
customers owned by us prior to the completion of the AT&T Broadband transaction
remain eligible for "small system" rate regulation.

          Finally, there are regulations which require cable television systems
to permit customers to purchase video programming on a per channel or a per
program basis without the necessity of subscribing to any tier of service, other
than the basic service tier, unless the cable television system is technically
incapable of doing so. Generally, this exemption from compliance with the
statute for cable television systems that do not have such technical capability
is available until a cable television system obtains the capability, but not
later than October 2002.

          Carriage of Broadcast Television Signals

          The 1992 Cable Act contains signal carriage requirements which allow
commercial television broadcast stations that are "local" to a cable television
system, that is to say that the system is located in the

                                       24

<PAGE>

station's area of dominant influence, to elect every three years whether to
require the cable television system to carry the station, subject to certain
exceptions, or whether the cable television system will have to negotiate for
"retransmission consent" to carry the station. The next election between
must-carry and retransmission consent will be October 1, 2002. A cable
television system is generally required to devote up to one-third of its
activated channel capacity for the carriage of local commercial television
stations whether pursuant to mandatory carriage requirements or the
retransmission consent requirements of the 1992 Cable Act. Local non-commercial
television stations are also given mandatory carriage rights, subject to certain
exceptions, within the larger of: (i) a 50 mile radius from the station's city
of license; or (ii) the station's Grade B contour, a measure of signal strength.
Unlike commercial stations, noncommercial stations are not given the option to
negotiate retransmission consent for the carriage of their signal. In addition,
cable television systems have to obtain retransmission consent for the carriage
of all "distant" commercial broadcast stations, except for certain
"superstations," which are commercial satellite-delivered independent stations
such as WGN. To date, compliance with the "retransmission consent" and "must
carry" provisions of the 1992 Cable Act has not had a material effect on us,
although this result may change in the future depending on such factors as
market conditions, channel capacity and similar matters when such arrangements
are renegotiated. The FCC recently completed a rulemaking proceeding on the
carriage of television signals in high definition and digital formats. The
outcome of this proceeding could have a material effect on the number of
services that a cable operator will be required to carry. Local television
broadcast stations transmitting solely in a digital format are entitled to
carriage. Stations transmitting in both digital and analog formats, which is
permitted during the current transition period, have no carriage rights for the
digital format during the transition.

          Deletion of Certain Programming

          Cable television systems that have 1,000 or more customers must, upon
the appropriate request of a local television station, delete the simultaneous
or nonsimultaneous network programming of a distant station when such
programming has also been contracted for by the local station on an exclusive
basis. FCC regulations also enable television stations that have obtained
exclusive distribution rights for syndicated programming in their market to
require a cable television system to delete or "black out" such programming from
other television stations which are carried by the cable television system.

          Franchise Fees

          Although franchising authorities may impose franchise fees under the
1984 Cable Act, such payments cannot exceed 5% of a cable television system's
annual gross revenues. Under the 1996 Telecom Act, franchising authorities may
not exact franchise fees from revenues derived from telecommunications services,
although they may be able to exact some additional compensation for the use of
public rights-of-way. Franchising authorities are also empowered, in awarding
new franchises or renewing existing franchises, to require cable television
operators to provide cable-related facilities and equipment and to enforce
compliance with voluntary commitments. In the case of franchises in effect prior
to the effective date of the 1984 Cable Act, franchising authorities may enforce
requirements contained in the franchise relating to facilities, equipment and
services, whether or not cable-related. The 1984 Cable Act, under certain
limited circumstances, permits a cable operator to obtain modifications of
franchise obligations.

          Renewal of Franchises

          The 1984 Cable Act and the 1992 Cable Act establish renewal procedures
and criteria designed to protect incumbent franchisees against arbitrary denials
of renewal and to provide specific grounds for franchising authorities to
consider in making renewal decisions, including a franchisee's performance under
the franchise and community needs. Even after the formal renewal procedures are
invoked, franchising authorities and cable television operators remain free to
negotiate a renewal outside the formal

                                       25

<PAGE>

process. Nevertheless, renewal is by no means assured, as the franchisee must
meet certain statutory standards. Even if a franchise is renewed, a franchising
authority may impose new and more onerous requirements such as upgrading
facilities and equipment, although the municipality must take into account the
cost of meeting such requirements. Similarly, if a franchising authority's
consent is required for the purchase or sale of a cable television system or
franchises, such authority may attempt to impose burdensome or onerous franchise
requirements in connection with a request for such consent. Historically,
franchises have been renewed for cable television operators that have provided
satisfactory services and have complied with the terms of their franchises. At
this time, we are not aware of any current or past material failure on our part
to comply with our franchise agreements. We believe that we have generally
complied with the terms of our franchises and have provided quality levels of
service.

          The 1992 Cable Act makes several changes to the process under which a
cable television operator seeks to enforce its renewal rights which could make
it easier in some cases for a franchising authority to deny renewal. Franchising
authorities may consider the "level" of programming service provided by a cable
television operator in deciding whether to renew. For alleged franchise
violations occurring after December 29, 1984, franchising authorities are no
longer precluded from denying renewal based on failure to substantially comply
with the material terms of the franchise where the franchising authority has
"effectively acquiesced" to such past violations. Rather, the franchising
authority is estopped if, after giving the cable television operator notice and
opportunity to cure, it fails to respond to a written notice from the cable
television operator of its failure or inability to cure. Courts may not reverse
a denial of renewal based on procedural violations found to be "harmless error."

          Channel Set-Asides

          The 1984 Cable Act permits local franchising authorities to require
cable television operators to set aside certain television channels for public,
educational and governmental access programming. The 1984 Cable Act further
requires cable television systems with thirty-six or more activated channels to
designate a portion of their channel capacity for commercial leased access by
unaffiliated third parties to provide programming that may compete with services
offered by the cable television operator. The 1992 Cable Act requires leased
access rates to be set according to a formula determined by the FCC.

          Ownership

          The 1996 Telecom Act repealed the statutory ban against local exchange
carriers providing video programming directly to customers within their local
exchange telephone service areas. Consequently, the 1996 Telecom Act permits
telephone companies to compete directly with operations of cable television
systems. Under the 1996 Telecom Act and FCC rules adopted to implement the 1996
Telecom Act, local exchange carriers may provide video service as broadcasters,
common carriers, or cable operators. In addition, local exchange carriers and
others may also provide video service through "open video systems," a regulatory
regime that may give them more flexibility than traditional cable television
systems. Open video system operators (including local exchange carriers) can,
however, be required to obtain a local cable franchise, and they can be required
to make payments to local governmental bodies in lieu of cable franchise fees.
In general, open video system operators must make their systems available to
programming providers on rates, terms and conditions that are reasonable and
nondiscriminatory. Where carriage demand by programming providers exceeds the
channel capacity of an open video system, two-thirds of the channels must be
made available to programmers unaffiliated with the open video system operator.

          The 1996 Telecom Act generally prohibits local exchange carriers from
purchasing a greater than 10% ownership interest in a cable television system
located within the local exchange carrier's telephone service area, prohibits
cable operators from purchasing local exchange carriers whose service

                                       26

<PAGE>

areas are located within the cable operator's franchise area, and prohibits
joint ventures between operators of cable television systems and local exchange
carriers operating in overlapping markets. There are some statutory exceptions,
including a rural exemption that permits buyouts in which the purchased cable
television system or local exchange carrier serves a non-urban area with fewer
than 35,000 inhabitants, and exemptions for the purchase of small cable
television systems located in non-urban areas. Also, the FCC may grant waivers
of the buyout provisions in certain circumstances.

          The 1996 Telecom Act made several other changes to relax ownership
restrictions and regulations of cable television systems. The 1996 Telecom Act
repealed the 1992 Cable Act's three-year holding requirement pertaining to sales
of cable television systems. The statutory broadcast/cable cross-ownership
restrictions imposed under the 1984 Cable Act were eliminated in 1996, although
the parallel FCC regulations prohibiting broadcast/cable common-ownership
remained in effect. The U.S. Court of Appeals for the District of Columbia
circuit has recently struck down these rules. The FCC's rules also generally
prohibit cable operators from offering satellite master antenna service separate
from their franchised systems in the same franchise area, unless the cable
operator is subject to "effective competition" there.

          The 1996 Telecom Act amended the definition of a "cable system" under
the Communications Act so that competitive providers of video services will be
regulated and franchised as "cable systems" only if they use public
rights-of-way. Thus, a broader class of entities providing video programming may
be exempt from regulation as cable television systems under the Communications
Act.

          Pursuant to the 1992 Cable Act, the FCC has imposed limits on the
number of subscribers which a single cable television operator can serve. In
general, no cable television operator can have an attributable interest in cable
television systems which serve more than 30% of all multichannel video
programming subscribers nationwide. Attributable interests for these purposes
include voting interests of 5% or more, unless there is another single holder of
more than 50% of the voting stock, officerships, directorships and general
partnership interests. The FCC has also adopted rules which limit the number of
channels on a cable television system which can be occupied by national video
programming services in which the entity which owns the cable television system
has an attributable interest. The limit is 40% of the first 75 activated
channels. The U.S. Court of Appeals for District of Columbia Circuit upheld the
constitutionality of these rules. A petition for certiorari was denied by the
Supreme Court. However, the U.S. Court of Appeals for the District of Columbia
Circuit reversed and remanded the horizontal and vertical ownership rules for
further proceedings on non-constitutional grounds.

          The 1996 Telecom Act provides that registered utility holding
companies and subsidiaries may provide telecommunications services, including
cable television, notwithstanding the Public Utilities Holding Company Act of
1935, as amended. Electric utilities must establish separate subsidiaries known
as "exempt telecommunications companies" and must apply to the FCC for operating
authority. Due to their resources, electric utilities could be formidable
competitors to traditional cable television systems.

          Access to Programming

          The 1992 Cable Act imposed restrictions on the dealings between cable
operators and cable programmers. Of special significance from a competitive
business posture, the 1992 Cable Act precludes video programmers affiliated with
cable companies from favoring their affiliated cable operators and requires such
programmers to sell their programming to other multichannel video distributors.
This provision limits the ability of vertically integrated cable programmers to
offer exclusive programming arrangements to cable companies. The prohibition on
certain types of exclusive programming arrangements is set to expire on October
5, 2002, unless the FCC determines that extension of the

                                       27

<PAGE>

prohibition is necessary to preserve and protect competition in video
programming distribution. We expect the FCC to make a determination on this
issue soon.

          Privacy

          The 1984 Cable Act imposes a number of restrictions on the manner in
which cable television operators can collect and disclose data about individual
system customers. The statute also requires that the system operator
periodically provide all customers with written information about its policies
regarding the collection and handling of data about customers, their privacy
rights under federal law and their enforcement rights. In the event that a cable
television operator was found to have violated the customer privacy provisions
of the 1984 Cable Act, it could be required to pay damages, attorneys' fees and
other costs. Under the 1992 Cable Act, the privacy requirements were
strengthened to require that cable television operators take such actions as are
necessary to prevent unauthorized access to personally identifiable information.
Certain of these requirements were modified by the Electronic Communications
Privacy Act of 2001.

          Franchise Transfers

          The 1992 Cable Act requires franchising authorities to act on any
franchise transfer request submitted after December 4, 1992 within 120 days
after receipt of all information required by FCC regulations and by the
franchising authority. Approval is deemed to be granted if the franchising
authority fails to act within such period.

          Technical Requirements

          The FCC has imposed technical standards applicable to all classes of
channels which carry downstream National Television System Committee video
programming. The FCC also has adopted additional standards applicable to cable
television systems using frequencies in the 108 to 137 MHz and 225 to 400 MHz
bands in order to prevent harmful interference with aeronautical navigation and
safety radio services and has also established limits on cable television system
signal leakage. Periodic testing by cable television operators for compliance
with the technical standards and signal leakage limits is required and an annual
filing of the results of these measurements is required. The 1992 Cable Act
requires the FCC to periodically update its technical standards to take into
account changes in technology. Under the 1996 Telecom Act, local franchising
authorities may not prohibit, condition or restrict a cable television system's
use of any type of customer equipment or transmission technology.

          The FCC has adopted regulations to implement the requirements of the
1992 Cable Act designed to improve the compatibility of cable television systems
and consumer electronics equipment. These regulations, among other things,
generally prohibit cable television operators from scrambling their basic
service tier. The 1996 Telecom Act directs the FCC to set only minimal standards
to assure compatibility between television sets, VCRs and cable television
systems, and otherwise to rely on the marketplace. Pursuant to the 1992 Cable
Act, the FCC has adopted rules to assure the competitive availability to
consumers of customer premises equipment, such as converters, used to access the
services offered by cable television systems and other multichannel video
programming distributors. Pursuant to those rules, consumers are given the right
to attach compatible equipment to the facilities of their multichannel video
programming distributors so long as the equipment does not harm the network,
does not interfere with the services purchased by other customers and is not
used to receive unauthorized services. As of July 1, 2000, multichannel video
programming distributors, other than operators of direct broadcast satellite
television systems, were required to separate security from non-security
functions in the customer premises equipment which they sell or lease to their
customers and offer their customers the option of using component security
modules obtained from the multichannel video programming

                                       28

<PAGE>

distributors with set-top units purchased or leased from retail outlets. As of
January 1, 2005, multichannel video programming distributors will be prohibited
from distributing new set-top equipment integrating both security and
non-security functions to their customers.

          Pursuant to the 1992 Cable Act, the FCC has adopted rules implementing
an emergency alert system. The rules require all cable television systems to
provide an audio and video emergency alert system message on at least one
programmed channel and a video interruption and an audio alert message on all
programmed channels. The audio alert message is required to state which channel
is carrying the full audio and video emergency alert system message. The FCC
rules permit cable television systems either to provide a separate means of
alerting persons with hearing disabilities of emergency alert system messages,
such as a terminal that displays emergency alert system messages and activates
other alerting mechanisms or lights, or to provide audio and video emergency
alert system messages on all channels. Cable television systems with 10,000 or
more basic customers per headend were required to install EAS equipment capable
of providing audio and video emergency alert system messages on all programmed
channels by December 31, 1998. Cable television systems with 5,000 or more but
fewer than 10,000 basic customers per headend will have until October 1, 2002 to
comply with that requirement. Cable television systems with fewer than 5,000
basic customers per headend will have a choice of providing either a national
level emergency alert system message on all programmed channels or installing
emergency alert system equipment capable of providing audio alert messages on
all programmed channels, a video interrupt on all channels, and an audio and
video emergency alert system message on one programmed channel. This must be
accomplished by October 1, 2002.

          Inside Wiring; Customer Access

          In a 1997 order, the FCC established rules that require an incumbent
cable operator upon expiration of a multiple dwelling unit service contract to
sell, abandon, or remove "home run" wiring that was installed by the cable
operator in a multiple dwelling unit building. These inside wiring rules are
expected to assist building owners in their attempts to replace existing cable
operators with new programming providers who are willing to pay the building
owner a higher fee, where such a fee is permissible. Additionally, the FCC has
proposed to restrict exclusive contracts between building owners and cable
operators or other multichannel video programming distributors. The FCC has also
issued an order preempting state, local and private restrictions on over-
the-air reception antennas placed on rental properties in areas where a tenant
has exclusive use of the property, such as balconies or patios. However, tenants
may not install such antennas on the common areas of multiple dwelling units,
such as on roofs. This order limits the extent to which multiple dwelling unit
owners may enforce certain aspects of multiple dwelling unit agreements which
otherwise would prohibit, for example, placement of direct broadcast satellite
television systems television receiving antennae in multiple dwelling unit
areas, such as apartment balconies or patios, under the exclusive occupancy of a
renter.

          Pole Attachments

          The FCC currently regulates the rates and conditions imposed by
certain public utilities for use of their poles unless state public service
commissions are able to demonstrate that they adequately regulate the rates,
terms and conditions of cable television pole attachments. A number of states
and the District of Columbia have certified to the FCC that they adequately
regulate the rates, terms and conditions for pole attachments. Illinois, Ohio
and Kentucky, states in which we operate, have made such a certification. In the
absence of state regulation, the FCC administers such pole attachment and
conduit use rates through use of a formula which it has devised. Pursuant to the
1996 Telecom Act, the FCC has adopted a new rate formula for any attaching
party, including cable television systems, which offers telecommunications
services. This new formula will result in higher attachment rates than at
present, but they will apply only to cable television systems which elect to
offer telecommunications services. Any increases pursuant to this

                                       29

<PAGE>

new formula began in 2001, and will be phased in by equal increments over the
five ensuing years. The FCC ruled that the provision of Internet services will
not, in and of itself, trigger use of the new formula. However, the U.S. Court
of Appeals for the Eleventh Circuit held that, since Internet provision is
neither a "cable service" or a "telecommunications service," neither rate
formula applies and, therefore, public utilities are free to charge what they
please. The Supreme Court recently reversed this decision. The FCC has also
initiated a proceeding to determine whether it should adjust certain elements of
the current rate formula. If adopted, these adjustments could increase rates for
pole attachments and conduit space.

          Other FCC Matters

          FCC regulation pursuant to the Communications Act also includes
matters regarding a cable television system's carriage of local sports
programming; restrictions on origination and cablecasting by cable television
operators; rules governing political broadcasts; equal employment opportunity;
deletion of syndicated programming; registration procedure and reporting
requirements; customer service; closed captioning; obscenity and indecency;
program access and exclusivity arrangements; and limitations on advertising
contained in nonbroadcast children's programming.

          The FCC has recently issued a Notice of Inquiry covering a wide range
of issues relating to Interactive Television ("ITV"). Examples of ITV services
are interactive electronic program guides and access to a graphic interface that
provides supplementary information related to the video display. In the near
term, cable systems are likely to be the platform of choice for the distribution
of ITV services. The FCC has posed a series of questions including the
definition of ITV, the potential for discrimination by cable systems in favor of
affiliated ITV providers, enforcement mechanisms, and the proper regulatory
classification of ITV service.

          Copyright

          Cable television systems are subject to federal copyright licensing
covering carriage of broadcast signals. In exchange for making semi-annual
payments to a federal copyright royalty pool and meeting certain other
obligations, cable television operators obtain a statutory license to retransmit
broadcast signals. The amount of this royalty payment varies, depending on the
amount of system revenues from certain sources, the number of distant signals
carried, and the location of the cable television system with respect to
over-the-air television stations. Any future adjustment to the copyright royalty
rates will be done through an arbitration process to be supervised by the U.S.
Copyright Office. Cable television operators are liable for interest on
underpaid and unpaid royalty fees, but are not entitled to collect interest on
refunds received for overpayment of copyright fees.

          Various bills have been introduced into Congress over the past several
years that would eliminate or modify the cable television compulsory license.
Without the compulsory license, cable television operators would have to
negotiate rights from the copyright owners for all of the programming on the
broadcast stations carried by cable television systems. Such negotiated
agreements would likely increase the cost to cable television operators of
carrying broadcast signals. The 1992 Cable Act's retransmission consent
provisions expressly provide that retransmission consent agreements between
television broadcast stations and cable television operators do not obviate the
need for cable operators to obtain a copyright license for the programming
carried on each broadcaster's signal.

          Copyrighted music performed in programming supplied to cable
television systems by pay cable networks, such as HBO, and basic cable networks,
such as USA Network, is licensed by the networks through private agreements with
the American Society of Composers and Publishers, generally known as ASCAP, and
BMI, Inc., the two major performing rights organizations in the United States.
Both the American Society of Composers and Publishers and BMI offer "through to
the viewer" licenses to the


                                       30

<PAGE>

cable networks which cover the retransmission of the cable networks' programming
by cable television systems to their customers.

          Licenses to perform copyrighted music by cable television systems
themselves, including on local origination channels, in advertisements inserted
locally on cable television networks, and in cross-promotional announcements,
must be obtained by the cable television operator from the American Society of
Composers and Publishers, BMI and/or SESAC, Inc.

          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. The terms and conditions of franchises vary
materially from jurisdiction to jurisdiction, and even from city to city within
the same state, historically ranging from reasonable to highly restrictive or
burdensome. Franchises generally contain provisions governing fees to be paid to
the franchising authority, length of the franchise term, renewal, sale or
transfer of the franchise, territory of the franchise, design and technical
performance of the system, use and occupancy of public streets and number and
types of cable television services provided. The terms and conditions of each
franchise and the laws and regulations under which it was granted directly
affect the profitability of the cable television system. The 1984 Cable Act
places certain limitations on a franchising authority's ability to control the
operation of a cable television system. The 1992 Cable Act prohibits exclusive
franchises, and allows franchising authorities to exercise greater control over
the operation of franchised cable television systems, especially in the area of
customer service and rate regulation. The 1992 Cable Act also allows franchising
authorities to operate their own multichannel video distribution system without
having to obtain a franchise and permits states or local franchising authorities
to adopt certain restrictions on the ownership of cable television systems.
Moreover, franchising authorities are immunized from monetary damage awards
arising from regulation of cable television systems or decisions made on
franchise grants, renewals, transfers and amendments. The 1996 Telecom Act
prohibits a franchising authority from either requiring or limiting a cable
television operator's provision of telecommunications services.

          Various proposals have been introduced at the state and local levels
with regard to the regulation of cable television systems, and a number of
states have adopted legislation subjecting cable television systems to the
jurisdiction of centralized state governmental agencies, some of which impose
regulation of a character similar to that of a public utility. To date, none of
the states in which we currently operate has enacted state level regulation.

          The foregoing describes all material present and proposed federal,
state and local regulations and legislation relating to the cable television
industry. Other existing federal regulations, copyright licensing and, in many
jurisdictions, state and local franchise requirements, currently are the subject
of a variety of judicial proceedings, legislative hearings and administrative
and legislative proposals which could change, in varying degrees, the manner in
which cable television systems operate. Neither the outcome of these proceedings
nor their impact upon the cable television industry or us can be predicted at
this time.

          Internet Access Service

          We offer a service which enables consumers to access the Internet at
high speeds via high capacity broadband transmission facilities and cable
modems. We compete with many other providers of Internet access services which
are known as Internet service providers ("ISPs"). ISPs include such companies as
America Online and Mindspring Enterprises as well as major telecommunications
providers, including AT&T and local exchange telephone companies. A number of
local franchising authorities have


                                       31

<PAGE>

attempted to require cable companies offering Internet access service over their
broadband facilities to allow access to those facilities on an unbundled basis
to other ISPs. To date, all such efforts have been overturned in the courts.
However, many ISPs and local franchising authorities have continued to ask the
U.S. Congress and the FCC to mandate such access, or at least to allow local
authorities to impose such a requirement. Although the FCC has thus far declined
to impose such an access requirement on cable companies, the issue remains under
consideration. The FCC has recently decided that cable Internet service should
be classified for regulatory purposes as an "information service" rather than
either a "cable service" or a "telecommunications service." Concurrently, the
FCC has initiated a wide-ranging rulemaking proceeding in which it seeks comment
on the regulatory ramifications of this classification. Among the issues to be
decided are whether the FCC should permit local authorities to impose an access
requirement, whether local authorities should be prohibited from imposing fees
on cable Internet service revenues, and what regulatory role local authorities
should be permitted to play. The outcome of this proceeding could have a
material impact on our provision of cable Internet service.

          There are currently few laws or regulations which specifically
regulate communications or commerce over the Internet. Section 230 of the
Communications Act, added to that act by the 1996 Telecom Act, declares it to be
the policy of the United States to promote the continued development of the
Internet and other interactive computer services and interactive media, and to
preserve the vibrant and competitive free market that presently exists for the
Internet and other interactive computer services, unfettered by federal or state
regulation. One area in which Congress did attempt to regulate content over the
Internet involved the dissemination of obscene or indecent materials. The
provisions of the 1996 Telecom Act, generally referred to as the Communications
Decency Act, were found to be unconstitutional, in part, by the United States
Supreme Court in 1997. In response, Congress passed the Child Online Protection
Act. The constitutionality of this act is currently being challenged in the
courts. Finally, disclosure of customer communications or records is governed by
the Electronic Communications Privacy Act of 2001.

          Local Telecommunications Services

          The 1996 Telecom Act provides that no state or local laws or
regulations may prohibit or have the effect of prohibiting any entity from
providing any interstate or intrastate telecommunications service. States are
authorized, however, to impose "competitively neutral" requirements regarding
universal service, public safety and welfare, service quality and consumer
protection. State and local governments also retain their authority to manage
the public rights-of-way and may require fair and reasonable, competitively
neutral and non-discriminatory compensation for management of the public
rights-of-way when cable operators provide telecommunications service. State and
local governments must publicly disclose such required payments.

          We have entered into a ten-year agreement with AT&T Broadband that
will allow AT&T Broadband to provide to customers all-distance telephone
services using our network infrastructure and AT&T Broadband's switching and
long distance transport facilities. Local telecommunications service is subject
to regulation by state utility commissions. Use of local telecommunications
facilities to originate and terminate long distance services, a service commonly
referred to as "exchange access," is subject to regulation both by the FCC and
by state utility commissions. As a provider of local exchange service, AT&T
Broadband would be subject to the requirements imposed upon local exchange
carriers by the 1996 Telecom Act. These include requirements governing resale,
telephone number portability, dialing parity, access to rights-of-way and
reciprocal compensation. AT&T Broadband's ability to successfully offer local
telecommunications service will be dependent, in part, on the opening of local
telephone networks by incumbent local telephone companies as required of them by
the 1996 Telecom Act.

                                       32

<PAGE>

          In January 1999, the United States Supreme Court held that the FCC has
authority under the Communications Act to establish rules to govern the pricing
of facilities and services provided by incumbent local exchange carriers
("ILECs") to open their local networks to competition. However, on July 18,
2000, the United States Court of Appeals for the Eighth Circuit vacated several
FCC rules concerning interconnection and pricing of ILEC network elements,
including a rule that mandates that ILECs set prices for unbundled network
elements ("UNEs") at the lowest cost network configuration, and another rule
that would have required the ILECs to bundle combinations of network elements at
the competing carrier's request. The U.S. Supreme Court is presently reviewing
this decision (consolidated with four other lower court challenges to the FCC's
interconnection rules). In addition, a later FCC order dealing with certain
other UNE issues remanded by the U.S. Supreme Court in its 1999 decision has
been appealed to the Eighth Circuit. In the meantime, in December 2001 the FCC
instituted a new rulemaking proceeding to reevaluate the list of available UNEs.
The FCC has also initiated rulemaking proceedings to establish uniform ordering
and provisioning performance standards for resale and UNEs, and for special
access services. The outcome of these court proceedings and FCC rulemakings will
have an effect on AT&T Broadband's ability to compete in the telecommunications
marketplace.

Employees

          As of December 31, 2001, we employed approximately 2,900 full-time
employees and 84 part-time employees. We consider our relations with our
employees to be good.

Item 2.  Properties

          A cable television system consists of three principal operating
components:

      .   The first component, the signal reception processing and originating
          point called a "headend," receives television, cable programming
          service, radio and data signals that are transmitted by means of
          off-air antennas, microwave relay systems and satellite earth systems.
          Each headend includes a tower, antennae or other receiving equipment
          at a location favorable for receiving broadcast signals and one or
          more earth stations that receives 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 second component of the system, the distribution network,
          originates at the headend and extends throughout the system's service
          area. A cable system's distribution network consists of microwave
          relays, coaxial or fiber optic cables placed on utility poles or
          buried underground and associated electronic equipment.

      .   The third component of the system is a "drop cable," which extends
          from the distribution network into each customer's home and connects
          the distribution system to the customer's television set.

          We own and lease parcels of real property for signal reception sites
which house our antenna towers and headends, microwave complexes and business
offices which includes our principal executive offices. In addition, we own our
cable systems' distribution networks, various office fixtures, test equipment
and service vehicles. The physical components of our cable systems require
maintenance and periodic upgrading to keep pace with technological advances. We
believe that our properties, both owned and leased, are in good condition and
are suitable and adequate for our business operations as presently conducted and
as proposed to be conducted.

                                       33

<PAGE>

Item 3.  Legal Proceedings

          Insight Kentucky and certain prior owners of the Kentucky systems,
including affiliates of AT&T Broadband, have been named in class actions
generally alleging that the Kentucky systems have improperly passed through
state and local property tax charges to customers. The plaintiffs in these
actions seek monetary damages and the enjoinment of the collection of such
taxes. Such class actions are (i) Alfred P. Sykes, Jr., Charles Pearl, Linda
Pearl vs. InterMedia Partners of Kentucky, L.P. and TCI TKR of Jefferson County,
Inc., which was filed on March 26, 1999 in Jefferson County Circuit Court and
consolidated with James F. Dooley vs. TCI TKR of Jefferson County and InterMedia
Partners of Kentucky, L.P., which was filed on March 24, 1999 in Jefferson
County Circuit Court, and (ii) Charles Shaw and Loretta Shaw vs. TCI TKR of
Northern Kentucky, Inc. TCI TKR of Southern Kentucky, Inc., TCI Cablevision of
North Central Kentucky, Inc., TCI Cablevision of Kentucky, Inc. and InterMedia
Partners of Kentucky, L.P., which was filed on June 4, 1999 in the Franklin
County Circuit Court. We have reached an agreement in principle with Plaintiffs'
counsel to settle these lawsuits. Such settlement is awaiting the execution of
definitive documentation and a determination of fairness by the respective
courts where these matters were filed.

          The City of Louisville, Kentucky has granted additional franchises to
Knology, Inc. and TotaLink of Kentucky, LLC. Our Kentucky subsidiary's franchise
from the City of Louisville provides us with the right to challenge the grant of
any subsequent franchises that are on terms more favorable than our own.
Pursuant to such franchise provision, we filed for declaratory judgment in the
Jefferson County Circuit Court against the City of Louisville, Kentucky for its
grant of a more favorable franchise to Knology on November 2, 2000, and to
TotaLink on December 21, 2000. The assertion of the declaratory judgment actions
effectively stayed the grant of these franchises pending a court determination
as to whether the franchises were granted on more favorable terms. The City of
Louisville has been granted summary judgment in the Knology action on the basis
that the franchise granted Knology was not more favorable than our own. We
intend to appeal such ruling.

          On November 8, 2000, Knology filed a federal court action in the
United States District Court for the Western District of Kentucky, naming
Insight LP and our Kentucky operating subsidiary as defendants. The action also
named the City of Louisville, Kentucky as a defendant. The suit seeks
unspecified money damages and injunctive relief for alleged violations of the
antitrust laws, the Communications Act and the Civil Rights Act of 1899, arising
out of our having filed, under provisions of our own franchise from the City,
the state court challenge to Knology's cable television franchise awarded by the
City. On December 20, 2000, we moved to dismiss the federal court action for
failure to state a claim for relief and for being outside the jurisdiction of
the federal court. On the same date, Knology moved for a preliminary injunction
"against" a provision of its franchise that suspends the franchise's
effectiveness during the pendency of our state court challenge. The court denied
our motion to dismiss and granted Knology the preliminary injunction effectively
removing the stay of their franchise. We believe we have substantial and
meritorious defenses to the asserted federal claims and intend to defend it
vigorously.

          We believe there are no other pending or threatened legal proceedings
that, if adversely determined, would have a material adverse effect on us.


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

        None.

                                       34

<PAGE>

Item 4A.  Executive Officers of the Registrant

          The executive officers of the Registrant are as follows:

Name                        Age          Position
----                        ---          --------
Sidney R. Knafel            71           Chairman of the Board and Director
Michael S. Willner          49           President, Chief Executive Officer and
                                         Director
Kim D. Kelly                45           Executive Vice President, Chief
                                         Operating Officer and Director
Dinesh C. Jain              38           Senior Vice President, Chief Financial
                                         Officer
Elliot Brecher              36           Senior Vice President, General Counsel
                                         and Secretary

          Sidney R. Knafel has been Chairman of the Board since 1985. He was the
founder, Chairman and an equity holder of Vision Cable Communications, Inc. from
1971 until its sale in 1981. Mr. Knafel is presently the managing partner of SRK
Management Company, a private investment company, and also serves as Chairman of
BioReliance Corporation, a biological testing company. He is a director of NTL
Incorporated, General American Investors Company, Inc. and IGENE Biotechnology,
Inc., as well as several private companies. Mr. Knafel is a graduate of Harvard
College and Harvard Business School.

          Michael S. Willner is a co-founder and has served as President and
Chief Executive Officer since 1985. Previously, Mr. Willner served as Executive
Vice President and Chief Operating Officer of Vision Cable from 1979 through
1985, Vice President of Marketing for Vision Cable from 1977 to 1979 and General
Manager of Vision Cable's Bergen County, New Jersey cable television system from
1975 to 1977. Currently, Mr. Willner is a director of NTL Incorporated. He is
Chairman of the National Cable & Telecommunications Association's Board of
Directors and Executive Committee. He also serves on the boards of C-SPAN,
CableLabs and the Walter Kaitz Foundation. Mr. Willner is a graduate of Boston
University's College of Communication and serves on the school's Executive
Committee.

          Kim D. Kelly has been Executive Vice President since 1990. Ms. Kelly
has also been Chief Operating Officer since January 1998 and was Chief Financial
Officer from 1990 until January 2002. Prior thereto, she served from 1982 to
1990 with Marine Midland Bank, becoming its Senior Vice President in 1988, with
primary responsibility for media lending activities. Ms. Kelly is Chairperson of
the Cable Advertising Bureau's Board of Directors. She also serves as a member
of the National Cable & Telecommunications Association Subcommittees for
Telecommunications Policy, Diversity Initiatives and Accounting. Ms. Kelly also
serves as a director of Bank of New York Hamilton Funds and serves on the boards
of Cable in the Classroom, The Cable Center and the Cable & Telecommunications
Association for Marketing Educational Foundation. Ms. Kelly is a graduate of
George Washington University.

          Dinesh C. Jain has served as Senior Vice President and Chief Financial
Officer since January 2002. Previously, Mr. Jain was employed for more than the
past five years as a Managing Director of NTL, one of Europe's leading cable and
telecommunications companies. His background in the cable industry includes a
nine-year period with OCOM Corporation and International CableTel, working in
various key general management positions. His roles have included Deputy
Managing Director, NTL Consumer Group, as well as Managing Director of Cable and
Wireless' Consumer Division.

          Elliot Brecher has served as Senior Vice President and General Counsel
since January 2000. Previously, he was associated with the law firm Cooperman
Levitt Winikoff Lester & Newman, P.C., which served as Insight's legal counsel
until July 2000. He joined that firm in February 1994 and served as a partner
from January 1996 until joining Insight. Prior to that, he was an associate of
the law firm Rosenman & Colin from October 1988. Mr. Brecher received his law
degree from Fordham University.

                                       35

<PAGE>

                                     PART II

Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters

          Our Class A common stock trades on The Nasdaq Stock Market(R)
("Nasdaq") under the symbol ICCI. The following table sets forth the range of
the high and low sales prices of the Class A common stock for the periods
indicated as reported by Nasdaq:

Quarter Ended                        High         Low
-------------                        ----         ---
March 31, 2000                       $30.500      $19.688
June 30, 2000                        $24.125      $13.375
September 30, 2000                   $18.500      $12.000
December 31, 2000                    $23.875      $11.688

March 31, 2001                       $28.938      $21.000
June 30, 2001                        $28.160      $18.000
September 30, 2001                   $27.150      $17.180
December 31, 2001                    $24.580      $17.570

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

          At February 28, 2002, there were approximately 242 and 25 stockholders
of record of our Class A and Class B common stock. The number of Class A
stockholders does not include beneficial owners holding shares through nominee
names.

Dividend Policy

          We have never paid any cash dividends and intend, for the foreseeable
future, to retain any future earnings for the development of our business. The
terms of our indebtedness and the indebtedness of our subsidiaries restrict our
ability to pay dividends. Our future dividend policy will be determined by the
Board of Directors on the basis of various factors, including our results of
operations, financial condition, capital requirements and investment
opportunities.

Recent Sales of Unregistered Securities

          During the fourth quarter of 2001, we granted stock options to certain
of our employees to purchase an aggregate of 280,000 shares of Class A common
stock. The grants were not registered under the Securities Act of 1933 because
the stock options either did not involve an offer or sale for purposes of
Section 2(a)(3) of the Securities Act of 1933, in reliance on the fact that the
stock options were granted for no consideration, or were offered and sold in
transactions not involving a public offering, exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2).

Item 6. Selected Financial Data

          In the following table, we provide you with our selected consolidated
historical financial and other data. We have prepared the consolidated selected
financial information using our consolidated financial statements for the five
years ended December 31, 2001. When you read this selected consolidated
historical financial and other data, it is important that you read along with it
the historical financial statements and related notes in our consolidated
financial statements included in this report, as well as

                                       36

<PAGE>

"Management's Discussion and Analysis of Financial Condition and Results of
Operations," also included in this report.

<TABLE>
<CAPTION>
                                                                                     Year Ended December 31,
                                                                --------------------------------------------------------------
                                                                      2001        2000          1999       1998        1997
                                                                --------------------------------------------------------------
                                                                         (dollars in thousands, except per share data)
<S>                                                             <C>           <C>            <C>        <C>          <C>
Statement of Operations Data:
        Revenues                                                  $  704,379   $  476,186    $ 242,693  $ 112,902    $ 67,698
        Operating costs and expenses:
            Programming and other operating costs                    258,934      170,071       73,208     30,984      18,765
            Selling, general and administrative expenses             129,044       92,014       53,946     23,863      14,652
            Non-recurring high-speed data charges                      3,785            -            -          -           -
            Non-cash compensation and related charges                      -            -       19,285          -           -
            Depreciation and amortization                            383,449      236,242      131,308     43,849      18,125
                                                                 --------------------------------------------------------------
        Total operating costs and expenses                           775,212      498,327      277,747     98,696      51,542
                                                                 --------------------------------------------------------------
       Operating income (loss)                                       (70,833)     (22,141)     (35,054)    14,206      16,156
       Other income (expense):
           Gain (loss) on cable systems exchange                      34,178         (956)      15,799    111,746      78,931
           Gain on contribution of cable systems to joint venture          -            -            -     44,312           -
           Interest expense, net                                    (205,730)    (109,753)     (50,398)   (28,106)    (15,962)
           Other                                                      (2,320)        (294)        (345)      (444)          -
                                                                 --------------------------------------------------------------
       Total other income (expense)                                 (173,872)    (111,003)     (34,944)   127,508      62,969
                                                                 --------------------------------------------------------------
       Income (loss) before minority interest, investment
           activity, income taxes and extraordinary item            (244,705)    (133,144)     (69,998)   141,714      79,125
       Minority interest                                             141,314       67,773       31,339      3,410           -
       Equity in losses of investees                                  (2,031)      (3,830)     (13,963)    (3,251)          -
       Impairment write-down of investments                           (9,899)     (88,554)           -          -           -
       Gain on sale of equity investments                                  -       80,943            -          -           -
                                                                 --------------------------------------------------------------
       Income (loss) before income taxes and Extraordinary item     (115,321)     (76,812)     (52,622)   141,873      79,125
       Benefit (provision) for income taxes                           46,618       33,825      (31,586)         -           -
                                                                 --------------------------------------------------------------
       Income (loss) before extraordinary item                       (68,703)     (42,987)     (84,208)   141,873      79,125
       Extraordinary loss from early extinguishment of debt, net
            of tax                                                    (6,086)           -            -     (3,267)     (5,243)
                                                                 --------------------------------------------------------------
       Net income (loss)                                             (74,789)     (42,987)     (84,208)   138,606      73,882
       Accrual of preferred interests                                (19,432)     (18,725)           -          -           -
       Accretion of redeemable Class B common units                        -            -       (7,118)    (5,729)          -
       Accretion to redemption value of preferred limited units            -            -            -          -     (15,275)
                                                                 --------------------------------------------------------------
       Net income (loss) applicable to common shareholders        $  (94,221)  $  (61,712)   $ (91,326) $ 132,877    $ 58,607
                                                                 ==============================================================

       Basic income (loss) per share before extraordinary item    $    (1.47)  $    (1.03)   $   (2.58) $    6.71    $   2.02
       Diluted income (loss) per share before extraordinary item  $    (1.47)  $    (1.03)   $   (2.58) $    4.55    $   1.87
       Basic income (loss) per share attributable to common
           Stockholders                                           $    (1.57)  $    (1.03)   $   (2.58) $    6.55    $   1.86
       Diluted income (loss) per share attributable to
           common Stockholders                                    $    (1.57)  $    (1.03)   $   (2.58) $    4.61    $   1.78

</TABLE>

                                       37

<PAGE>

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                            2001         2000         1999         1998          1997
                                                        ---------------------------------------------------------------
                                                                         (dollars in thousands)
<S>                                                     <C>          <C>          <C>           <C>          <C>
Other Financial Data:

        EBITDA  (1)                                     $  308,265   $  209,977   $   81,946    $  54,360    $  34,281

        EBITDA margin (2)                                     43.8%        44.1%        33.8%        48.1%        50.6%

        Capital expenditures                               325,581      262,241      135,929       44,794       27,981

        Net cash provided by operating activities          161,325       91,632       96,448       44,760       10,436

        Net cash used in investing activities              802,875      279,810      516,487      142,190       27,981

        Net cash provided by financing activities          806,365      108,400      513,648      116,250       17,891

Balance Sheet Data:

        Cash and cash equivalents                       $  198,548   $   33,733   $  113,511    $  19,902    $   1,082

        Property, plant and equipment, net               1,151,709      820,888      643,138      155,412       63,842

        Total assets                                     3,867,392    2,244,586    1,989,470      660,916      158,103

        Total debt, including preferred interests        2,728,189    1,552,804    1,233,000      573,663      207,488

        Partners' (deficit) stockholders' equity           646,030      540,680      588,060       (7,928)    (127,982)
</TABLE>

<TABLE>
<CAPTION>

                                                                          As of December 31, 2001, except where noted
                                                          --------------------------------------------------------------------------
                                                          Indiana      Kentucky      Illinois      Ohio       Managed       Total
                                                          Systems      Systems      Systems (3)   System     Systems (4)   Systems
                                                          -------      -------      -----------   ------     -----------   -------
<S>                                                       <C>          <C>          <C>           <C>          <C>
Technical Data:
        Network miles                                        8,075        9,081        8,143        2,750       28,049       31,435
        Number of headends                                      14           10           38            1           18           81
        Number of headends
           expected upon
           completion of upgrades
           during 2002 (5) (6) (7)                               6            5            9            1            0           21
        Number of headends
           serving 95% of our
           customers expected
           upon completion of our
           upgrades. (5) (6) (7)                                 3            4            6            1            0           14

Operating Data:
        Homes passed (8)                                   548,300      758,500      703,000      191,000      187,600    2,388,400
        Basic customers (9)                                320,200      447,900      429,500       86,100      117,200    1,400,900
        Basic penetration (10)                                58.4%        59.1%        61.1%        45.1%        62.5%        58.7%
        Digital ready homes (11)                           272,900      430,400      373,900       67,200            0    1,144,400
        Digital customers (12)                              55,100      113,100       66,900       22,600            0      257,700
        Digital penetration (13)                              20.2%        26.3%        17.9%        33.6%           0         22.5%
        Premium units (14)                                 146,500      274,800      293,500       66,700       36,300      817,800
        Premium penetration (15)                              45.7%        61.4%        68.3%        77.5%        31.0%        58.4%
        Cable modem customers (16)                          20,500       27,500       28,600       11,500          400       88,500
</TABLE>

(1)  Represents earnings (loss) before interest, taxes, depreciation and
     amortization, minority interest, gain (loss) on cable system exchanges and
     contributions to joint venture, impairment write-down of investments, gain
     on sale of equity investments and extraordinary items. We believe that
     EBITDA is commonly used in the cable television industry to analyze and
     compare cable television companies on the basis of operating performance,
     leverage and liquidity. However, EBITDA is not intended to be a performance
     measure that should be regarded as an alternative to, or more meaningful
     than, either operating income or net income as an indicator of operating
     performance or cash flows as a measure of

                                       38

<PAGE>

     liquidity, as determined in accordance with generally accepted accounting
     principles. EBITDA is not necessarily comparable to similarly titled
     amounts of other companies. See our financial statements, including the
     statements of cash flows, which appear elsewhere in this report.

(2)  Represents EBITDA as a percentage of total revenues.

(3)  Includes our Griffin, Georgia system.

(4)  Projections for capital expenditures related to managed system rebuilds are
     subject to approval by AT&T Broadband.

(5)  Headends in managed systems will be consolidated into the Indiana and
     Kentucky networks.

(6)  The upgrades of the recently acquired Illinois systems are scheduled to be
     completed by the end of 2002.

(7)  Includes newly acquired Indiana systems in Anderson, Bloomington, and
     Cynthiana.

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

(9)  Basic customers are customers of a cable television system who receive a
     package of over-the-air broadcast stations, local access channels and
     certain satellite-delivered cable television services, other than premium
     services, and who are usually charged a flat monthly rate for a number of
     channels.

(10) Basic penetration means basic customers as a percentage of total number of
     homes passed.

(11) Digital ready homes means the total number of homes passed to which digital
     service is available.

(12) Customers with a digital converter box.

(13) Digital penetration means digital service units as a percentage of digital
     ready homes.

(14) Premium units mean the number of subscriptions to premium services, which
     are paid for on an individual unit basis.

(15) Premium penetration means premium service units as a percentage of the
     total number of basic customers. A customer may purchase more than one
     premium service, each of which is counted as a separate premium service
     unit. This ratio may be greater than 100% if the average customer
     subscribes to more than one premium service unit.

(16) Customers receiving high-speed Internet service.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Introduction

             On October 31, 1998, we exchanged our Utah systems for AT&T
Broadband's Evansville, Indiana system. Simultaneously, we completed a
contribution agreement with AT&T Broadband forming

                                       39

<PAGE>

Insight Communications Midwest (formerly Insight Communications of Indiana, LLC)
and contributed certain of our Indiana systems, the Noblesville, Lafayette and
Jeffersonville systems, as well as the Evansville system to Insight
Communications Midwest. At the same time, AT&T Broadband contributed most of its
Indiana systems to Insight Communications Midwest.

       On July 26, 1999, we completed our initial public offering of Class A
common stock. The offering proceeds, net of underwriting discounts and other
offering expenses, totaled approximately $607.0 million and was applied
primarily toward the repayment of senior indebtedness and to finance our October
1, 1999 acquisition of Kentucky cable television systems, as described below.
Prior to the offering, we operated as a limited partnership. We reconstituted as
a corporation upon the completion of the offering, at which time all of the
limited partnership's units were exchanged for shares of our common stock.

       On October 1, 1999, we acquired a combined 50% interest in InterMedia
Capital Partners VI, L.P. (now known as Insight Communications of Kentucky) from
related parties of Blackstone Cable Acquisition Company, LLC, related parties of
InterMedia Capital Management VI, LLC and a subsidiary and related party of AT&T
Broadband, for approximately $341.5 million (inclusive of expenses), and Insight
Midwest assumed debt of approximately $742.1 million.

       On October 1, 1999, we completed an agreement with affiliates of AT&T
Broadband, pursuant to which we and affiliates of AT&T Broadband each
contributed our respective 50% interests in Insight Kentucky and in Insight
Communications Midwest in exchange for a 50% interest in Insight Midwest.

       On July 17, 2000, we entered into a ten-year agreement with AT&T
Broadband that will allow AT&T Broadband to provide telephone services under the
AT&T Digital Phone brand using our network infrastructure and AT&T Broadband's
switching and transport facilities.

       On August 8, 2000, we completed the purchase of the remaining 25% common
equity interest in Insight Ohio, which we previously did not own. At the same
time, the Insight Ohio operating agreement was amended to provide us with 70% of
its total voting power. As such, the results of Insight Ohio have been
consolidated in our results for the years ended December 31, 2001 and 2000.
Prior to 2000, we accounted for our 75% non-voting common equity interest in
Insight Ohio under the equity method.

       On January 5, 2001 (effective January 1, 2001), we completed a series of
transactions with the AT&T cable subsidiaries that increased by 355,000 the
number of customers we serve. We refer in this report to these transactions,
including related bank financing, as the "AT&T transactions." Specifically,
Insight Midwest acquired:

          .   all of our systems not already owned by Insight Midwest serving
              approximately 175,000 customers, as well as systems which we
              acquired from AT&T cable subsidiaries serving approximately
              105,000 customers; and

          .   systems from the AT&T cable subsidiaries located in Illinois \
              serving approximately 250,000 customers.

       Insight Midwest acquired the systems from us and the AT&T cable
subsidiaries subject to indebtedness in the amount of $685.0 million. Insight
Midwest remains equally owned by us and AT&T Broadband. We continue to serve as
the general partner of Insight Midwest and manage and operate the Insight
Midwest systems.

                                       40

<PAGE>

Results of Operations

           Substantially all of our revenues are earned from customer fees for
cable television programming services including premium, digital and
pay-per-view services and ancillary services, such as rental of converters and
remote control devices, installations and from selling advertising. In addition,
we earn revenues from commissions for products sold through home shopping
networks.

           We have generated increases in revenues and EBITDA for each of the
past three fiscal years, primarily through a combination of acquisitions,
internal customer growth, increases in monthly revenue per customer and growth
in advertising and increasingly new revenue from selling new services including
high speed data access and interactive digital video.

           We have had a history of net losses and expect to continue to report
net losses for the foreseeable future. The principal reasons for our prior and
anticipated net losses include depreciation and amortization expenses associated
with our acquisitions and capital expenditures related to construction and
upgrading of our systems, and interest costs on borrowed money. We cannot
predict what impact, if any, continued losses will have on our ability to
finance our operations in the future.

           The following table is derived for the periods presented from our
consolidated financial statements that are included in this report and sets
forth certain statement of operations data for our consolidated operations:

<TABLE>
<CAPTION>
                                                                            Year ended December 31,
                                                                     2001             2000         1999
                                                                 ------------------------------------------
                                                                                  (in thousands)

<S>                                                              <C>             <C>           <C>
Revenue                                                           $  704,379     $   476,186   $   242,693
Operating costs and expenses:
     Programming and other operating costs                           258,934         170,071        73,208
     Selling, general and administrative                             129,044          92,014        53,946
     Non-recurring high-speed data service charges                     3,785               -             -
     Non-cash compensation and related charges                             -               -        19,285
     Depreciation and amortization                                   383,449         236,242       131,308
                                                                 ------------------------------------------
Total operating costs and expenses                                   775,212         498,327       277,747
                                                                 ------------------------------------------
Operating loss                                                       (70,833)       (22,141)      (35,054)
EBITDA                                                               308,265         209,977        81,946
Interest expense                                                     213,045         115,524        57,053
Income tax benefit (provision)                                        46,618          33,825      (31,586)
Net loss                                                             (74,789)       (42,987)      (84,208)
Net cash provided by operating activities                            161,325          91,632        96,448
Net cash used in investing activities                                802,875         279,810       516,487
Net cash provided by financing activities                            806,365         108,400       513,648
</TABLE>

           EBITDA represents earnings before interest, taxes, depreciation and
amortization, minority interest, gain (loss) on cable system exchanges,
impairment write-down of investments, gain on sale of equity investments and
extraordinary items. We believe that EBITDA is commonly used in the cable
television industry to analyze and compare cable television companies on the
basis of operating

                                       41

<PAGE>

performance, leverage and liquidity. However, EBITDA is not intended to be a
performance measure that should be regarded as an alternative to, or more
meaningful than, either operating income or net income as an indicator of
operating performance or cash flows as a measure of liquidity, as determined in
accordance with accounting principles generally accepted in the United States.
Refer to our financial statements, including our statements of cash flows, which
appear elsewhere in this report.

           The following calculations of EBITDA are not necessarily comparable
to similarly titled amounts of other companies:

<TABLE>
<CAPTION>

                                                                               Year ended December 31,
                                                                           2001          2000         1999
                                                                       ----------------------------------------
                                                                                      (in thousands)
<S>                                                                    <C>           <C>          <C>
Net loss                                                               $   (74,789)  $  (42,987)  $   (84,208)
Adjustments:
     Interest expense                                                      213,045      115,524        57,053
     Interest income                                                        (7,315)      (5,771)       (6,655)
     Tax (benefit) provision                                               (46,618)     (33,825)       31,586
     Depreciation and amortization                                         383,449      236,242       131,308
     Minority interest                                                    (141,314)     (67,773)      (31,339)
     Loss (gain) on cable system exchange                                  (34,178)         956       (15,799)
     Impairment write-down of investments                                    9,899       88,554             -
     Gain on sale of equity investments                                          -      (80,943)            -
     Extraordinary loss from early extinguishment of debt, net of tax        6,086            -             -
                                                                       ----------------------------------------
EBITDA                                                                 $   308,265   $  209,977   $    81,946
                                                                       ----------------------------------------
</TABLE>

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

           Revenue increased $228.2 million or 47.9% to $704.4 million for the
year ended December 31, 2001 from $476.2 million for the year ended December 31,
2000. The increase in revenue was primarily the result of the Illinois cable
systems acquired from AT&T in the AT&T transactions (the "AT&T Illinois
Systems"). The incremental revenue generated by the acquisition of the AT&T
Illinois Systems approximated $181.2 million, which represents 79.4% of the
increase in consolidated revenue. Excluding the AT&T Illinois Systems, revenue
increased 9.9% largely due to the sale of new services, and revenue for digital
and high-speed data increased by $34.6 million, a combined 132.5% growth rate.
Revenue by service offering were as follows for the years ended December 31, (in
thousands):

                                     2001                   2000
                                  Revenue by    % of     Revenue by      % of
                                    Service     Total      Service      Total
                                   Offering    Revenue    Offering     Revenue
                                   --------    -------    --------     -------
          Basic                   $  474,978     67.4%  $   329,721       69.2%
          Premium                     57,642      8.2%       46,402        9.7%
          Pay-per-view                 4,102       .6%        6,830        1.4%
          Digital                     47,134      6.7%       15,811        3.3%
          Advertising sales           46,907      6.7%       34,934        7.3%
          Data services               35,825      5.1%       10,314        2.2%
          Other                       37,791      5.3%       32,174        6.9%
                                  ----------  --------  -----------   ---------

          Total                   $  704,379    100.0%  $   476,186      100.0%
                                  ==========  ========  ===========   =========

           On a pro forma basis including the AT&T Illinois Systems, RGUs
(Revenue Generating Units)

                                       42

<PAGE>

were approximately 1,635,300 as of December 31, 2001 compared to approximately
1,485,200 as of December 31, 2000. This represents an annualized growth rate of
10.1%. RGUs represent the sum of basic and digital video, high-speed data and
telephone customers.

           Average monthly revenue per basic customer, including management fee
income, was $45.93 for the year ended December 31, 2001 compared to $42.92 for
the year ended December 31, 2000 primarily reflecting the continued successful
rollout of new product offerings in the Indiana, Kentucky and Ohio markets.
Average monthly revenue per basic customer for high-speed data and interactive
digital video increased to $5.41 for the year ended December 31, 2001 from $2.36
for the year ended December 31, 2000. Excluding the AT&T Illinois Systems, the
number of high-speed data service customers increased to approximately 62,900 as
of December 31, 2001 from approximately 30,300 as of December 31, 2000, while
digital customers increased to approximately 208,000 as of December 31, 2001
from approximately 103,300 as of December 31, 2000.

           Programming and other operating costs increased $88.9 million or
52.3% to $258.9 million for the year ended December 31, 2001 from $170.1 million
for the year ended December 31, 2000. The increase in programming and other
operating costs was primarily the result of the acquisition of the AT&T Illinois
Systems. The incremental expense resulting from the AT&T Illinois Systems
approximated $62.8 million, which represents 70.7% of the increase in
programming and other operating costs. Excluding these systems, programming and
other operating costs increased by approximately $26.1 million or 15.3%,
primarily as a result of increased programming rates and additional programming.

           Selling, general and administrative expenses increased $37.0 million
or 40.2% to $129.0 million for the year ended December 31, 2001 from $92.0
million for the year ended December 31, 2000. The increase in selling, general
and administrative expenses was primarily the result of the acquisition of the
AT&T Illinois Systems. The incremental expense resulting from the AT&T Illinois
systems approximated $27.5 million, which represents 74.4% of the increase.
Excluding these systems, selling, general and administrative costs increased by
approximately $9.5 million or 10.3%, primarily reflecting increased marketing
activity and corporate expenses associated with new service introductions.

           Non-recurring high-speed data service charges were incurred in the
year ended December 31, 2001 as a result of payments made to At Home Corporation
("@Home"), the former provider of high-speed data services for all of our
systems, except for those located in Ohio. On September 28, 2001, @Home filed
for protection under Chapter 11 of the Bankruptcy Code. For the purpose of
continuing service to existing customers and to resume the provisioning of
service to new customers, we entered into an interim agreement with @Home to
extend service through November 30, 2001. Further, in December 2001, we entered
into an additional interim service arrangement whereby we paid $10.0 million to
@Home to extend service for three months through February 28, 2002 that is being
recorded into expense ratably over the three-month period. As a result of these
interim arrangements we incurred approximately $2.8 million in excess of our
original agreed-to cost for such services rendered during the year ended
December 31, 2001. Additionally, we have recorded an allowance for bad debt of
$1.0 million for a net receivable from @Home in connection with monies @Home
collected from our high-speed data customers on our behalf prior to September
28, 2001. These additional costs are included in non-recurring high-speed data
service charges in our statement of operations.

           Depreciation and amortization expense increased $147.2 million or
62.3% to $383.4 million for the year ended December 31, 2001 from $236.2 million
for the year ended December 31, 2000. The increase in depreciation and
amortization expense was primarily the result of the acquisition of the AT&T
Illinois Systems. The incremental expense resulting from the AT&T Illinois
Systems approximated $96.4 million, which represents 65.5% of the increase.
Excluding these systems, depreciation and amortization

                                       43

<PAGE>

expense increased by approximately $50.8 million or 21.5%, primarily due to
capital expenditures made to rebuild our existing cable equipment, roll-out new
product offerings and add telephony capabilities to our network.

           EBITDA increased $98.3 million or 46.8% to $308.3 million for the
year ended December 31, 2001 from $210.0 million for the year ended December 31,
2000. This increase was primarily due to the results generated by the AT&T
Illinois Systems.

           Interest expense increased $97.5 million or 84.4% to $213.0 million
for the year ended December 31, 2001 from $115.5 million for the year ended
December 31, 2000. The increase in interest expense was primarily the result of
higher outstanding debt resulting from the acquisition of the AT&T Illinois
Systems and funding of capital expenditures during the past year offset by lower
average interest rates.

           The benefit for income taxes was $46.6 million and $33.8 million for
the year ended December 31, 2001 and 2000, representing effective tax rates of
40.4% and 44.0%.

           For the year ended December 31, 2001, the net loss was $74.8 million
primarily for the reasons set forth above.

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

           Revenue increased $233.5 million or 96.2% to $476.2 million for the
year ended December 31, 2000 from $242.7 million for the year ended December 31,
1999. The increase in revenue was primarily the result of the acquisition of the
Kentucky cable systems and consolidation of Insight Ohio. The incremental
revenue earned from the Kentucky systems approximated $173.4 million, or 74.3%
of the consolidated revenue increase and Insight Ohio accounted for $49.7
million, or 21.3% of the consolidated revenue increase.

           Revenue by service offering were as follows for the years ended
December 31, (in thousands):

                                     2000                    1999
                                  Revenue by    % of      Revenue by    % of
                                   Service      Total      Service      Total
                                   Offering    Revenue     Offering    Revenue
                                   --------    -------     --------    -------
           Basic                 $   329,721      69.2%  $   172,199      71.0%
           Premium                    46,402       9.7%       24,434      10.1%
           Pay-per-view                6,830       1.4%        3,354       1.4%
           Digital                    15,811       3.3%        6,919       2.8%
           Advertising sales          34,934       7.3%       17,478       7.2%
           Data services              10,314       2.2%        1,263       0.5%
           Other                      32,174       6.9%       17,046       7.0%
                                 -----------  --------  ------------  ---------

           Total                 $   476,186     100.0%  $   242,693     100.0%
                                 ===========  ========  ============  =========

           Average monthly revenue per basic customer, including management fee
income, was $42.92 for the year ended December 31, 2000 compared to $38.44 for
the year ended December 31, 1999 primarily reflecting rate increases as we
continued to activate nodes in rebuilt areas resulting in an increase

                                       44

<PAGE>

in average monthly basic revenue per customer of $2.45. Average monthly basic
revenue per customer averaged $29.72 during the year ended December 31, 2000
compared to $27.28 during the comparable period of 1999. In addition, monthly
revenue for new services including high-speed data and interactive digital video
caused revenue per customer to increase 82% to $2.36.

           Programming and other operating costs increased $96.9 million or
132.3% to $170.1 million for the year ended December 31, 2000 from $73.2 million
for the year ended December 31, 1999. The incremental expense resulting from the
Kentucky systems approximated $62.3 million accounting for 64.3% of the expense
increase and the consolidation of Insight Ohio accounted for approximately $19.0
million or 19.6% of the expense increase. Excluding these systems, programming
and other operating costs increased by approximately $15.6 million or 21.3%,
primarily as a result of increased programming rates and additional programming.

           Selling, general and administrative expenses increased $38.1 million
or 70.6% to $92.1 million for the year ended December 31, 2000 from $53.9
million for the year ended December 31, 1999. The incremental expense resulting
from the Kentucky systems approximated $25.5 million accounting for 66.9% of the
expense increase and the consolidation of Insight Ohio accounted for
approximately $10.6 million or 27.8% of the expense increase. Excluding these
systems, selling, general and administrative costs increased by approximately
$2.0 million or 5.2%, primarily reflecting increased marketing activity and
corporate expenses associated with new service introductions.

           Depreciation and amortization expense increased $104.9 million or
79.9% to $236.2 million for the year ended December 31, 2000 from $131.3 million
for the year ended December 31, 1999. This increase was primarily due to the
acquisitions of the Kentucky and Ohio cable systems and additional capital
expenditures associated with the rebuilds of our systems, partially offset by a
decrease in depreciation expense attributable to a change in estimate as of
January 1, 2000, which resulted in new assets being depreciated over longer
lives.

           For the year ended December 31, 2000, an operating loss of $22.1
million was incurred as compared to an operating loss of $35.1 million for the
year ended December 31, 1999, primarily for the reasons set forth above. The
operating loss for 1999 includes a one-time non-cash compensation expense of
$19.3 million that was recorded in the third quarter of 1999.

           EBITDA increased $128.0 million or 156.2% to $210.0 million for the
year ended December 31, 2000 from $81.9 million for the year ended December 31,
1999. This increase was primarily due to a full year of results of the Kentucky
Systems and Ohio Systems reflected in 2000 and overall increased revenue
partially offset by increased programming and other operating costs, primarily
as a result of increased programming rates and additional programming.

           Interest expense increased $58.5 million or 102.5% to $115.5 million
for the year ended December 31, 2000 from $57.0 million for the year ended
December 31, 1999. The increase was primarily due to higher average outstanding
indebtedness related to the Kentucky acquisition and the consolidation of
Insight Ohio. Average debt outstanding during the year ended December 31, 2000
was $1.3 billion at an average interest rate of 8.8%.

           The benefit for income taxes was $33.8 million for the year ended
December 31, 2000. The provision for income taxes was $31.6 million, which
consisted primarily of a one-time, non-recurring charge recorded for deferred
taxes upon the exchange of the limited partnership interests in Insight LP for
our common stock at the time of our initial public offering.

                                       45

<PAGE>

             For the year ended December 31, 2000, the net loss was $43.0
million primarily for the reasons set forth above.

Liquidity and Capital Resources

             Our business requires cash for operations, debt service, capital
expenditures and acquisitions. The cable television business has substantial
on-going capital requirements for the construction, expansion and maintenance of
its broadband networks. Expenditures have primarily been used to upgrade our
existing cable network, and in the future will be used for network extensions,
new services, converters and network upgrades. Historically, we have been able
to meet our cash requirements with cash flow from operations, borrowings under
our credit facilities and issuances of private and public debt and equity.

             On July 26, 1999, we completed our initial public offering of
shares of common stock, generating gross proceeds of $648.0 million. We incurred
approximately $41.0 million of underwriting discounts and expenses in connection
with the offering, resulting in net proceeds of $607.0 million. The net proceeds
were applied primarily toward the repayment of senior indebtedness and to
finance our October 1, 1999 acquisition of the Kentucky cable television
systems.

             Cash provided by operations for the year ended December 31, 2001
and 2000 was $161.3 million and $91.6 million. The increase was primarily
attributable to the AT&T Illinois Systems and the timing of cash receipts and
payments related to working capital accounts.

             Cash used in investing activities for the year ended December 31,
2001 and 2000 was $802.9 million and $279.8 million. The increase was primarily
attributable to the purchase of cable television systems, net of cash acquired
and increased capital expenditures relating to our recent system rebuilds.

             Cash provided by financing activities for the year ended December
31, 2001 and 2000 was $806.4 million and $108.4 million. The increase was
primarily attributable to net borrowings from credit facilities partially offset
by repayment of debt associated with the purchase of cable television systems.

             For the year ended December 31, 2001 and December 31, 2000, we
spent $325.6 million and $262.2 million in capital expenditures largely to
support our plant rebuild including interactive technology and telephone
services, digital converter and modem purchases and, to a lesser extent, network
extensions.

             For the year ending December 31, 2002, it is anticipated that we
will spend approximately $300.0 million on capital expenditures, including
capital expenditures required for success-based deployment of new services and
telephone services and the upgrade of the Illinois cable television systems,
which will involve the wide deployment of fiber optics and other capital
projects associated with implementing our clustering strategy.

             We have concluded a number of financing transactions, which fully
support our operating plan. These transactions are detailed as follows:

             On October 1, 1999, in connection with the formation of Insight
Midwest and our acquisition of a 50% interest in the Kentucky systems, Insight
Midwest completed an offering of $200.0 million principal amount of its 9 3/4%
senior notes due 2009. The net proceeds of the offering were used to repay
certain outstanding debt of the Kentucky systems. On November 6, 2000, Insight
Midwest completed an offering of $500.0 million principal amount of its 10 1/2%
senior notes due 2010. The net proceeds of the offering of $486.0 million were
used to repay a portion of the Indiana and Kentucky credit facilities.

                                       46

<PAGE>

Interest on the Insight Midwest 9 3/4% senior notes is payable on April 1 and
October 1 of each year and interest on the Insight Midwest 10 1/2% senior notes
is payable on May 1 and November 1 of each year. The indentures relating to
these senior notes impose certain limitations on the ability of Insight Midwest
to, among other things, incur debt, make distributions, make investments and
sell assets.

             On January 5, 2001, we consummated the AT&T transactions with the
AT&T cable subsidiaries. As a result of these AT&T transactions, the number of
customers served by us increased by 355,000. In conjunction with the AT&T
transactions, a subsidiary of Insight Midwest, Insight Midwest Holdings, LLC,
which subsidiary serves as a holding company for all of Insight Midwest's
systems other than the Columbus, Ohio system, consummated on January 5, 2001 a
$1.75 billion credit facility from which it borrowed $663.0 million to repay the
Indiana and Kentucky credit facilities and $685.0 million to finance the AT&T
transactions.

             The Midwest Holdings credit facility permits the distribution of
cash from Midwest Holdings' subsidiaries to enable Insight Midwest to pay
interest on its 9 3/4% senior notes and 10 1/2% senior notes, so long as there
exists no default under the credit facility. The Midwest Holdings credit
facility contains covenants restricting, among other things, the ability of
Midwest Holdings and its subsidiaries to acquire or dispose of assets, make
investments and engage in transactions with related parties. The facility also
requires compliance with certain financial ratios and contains customary events
of default. As of December 31, 2001, we were in compliance with this credit
facility's covenant requirements. Given current operating conditions and
projected results of operations, we anticipate continued compliance under this
credit facility agreement for the foreseeable future.

             On February 6, 2001, we completed an offering of $400.0 million
principal amount at maturity of 12 1/4% senior discount notes due 2011. These
notes were issued at a discount to their principal amount at maturity resulting
in gross proceeds to us of approximately $220.1 million. We utilized
approximately $20.2 million of the proceeds to repay the outstanding amount of
our inter-company loan from Insight Midwest, which we incurred in connection
with the financing of the AT&T transactions. We intend to use the remaining
proceeds for general corporate purposes, including joint ventures and/or
strategic acquisitions. No cash interest on the discount notes will accrue prior
to February 15, 2006. Thereafter, cash interest on the discount notes will
accrue and be payable on February 15 and August 15 of each year, commencing
August 15, 2006. The initial accreted value of the discount notes of
approximately $220.1 million will increase until February 15, 2006 such that the
accreted value will equal the principal amount of $400.0 million on February 15,
2006.

             Insight Midwest acquired all of the common equity interests of
Insight Ohio as part of the AT&T transactions. Insight Ohio is an unrestricted
subsidiary under the indentures governing our and Insight Midwest's notes, and
is prohibited by the terms of its indebtedness from making distributions to
Insight Midwest. Insight Ohio has a $25.0 million reducing revolving credit
facility that supports the Ohio system. The facility requires principal payments
commencing in March 2003 through September 2004. As of December 31, 2001, $25.0
million was outstanding under this credit facility. Given current operating
conditions and projected results of operations, we anticipate full compliance
with this credit facility agreement for the foreseeable future.

             Insight Holdings of Ohio LLC, a wholly owned subsidiary of Insight
Midwest, owns 100% of the common equity of Insight Ohio and Coaxial
Communications of Central Ohio, Inc. owns 100% of the preferred equity of
Insight Ohio. Such common and preferred equity was issued in August 1998 as part
of a financing plan which resulted in (i) Coaxial Communications contributing
the Ohio system to Insight Ohio, (ii) Coaxial Communications and Phoenix
Associates, an affiliate of Coaxial Communications, issuing $140.0 million
principal amount of 10% senior notes due 2006, (iii) Coaxial LLC and Coaxial

                                       47

<PAGE>

Financing Corp., an affiliate of Coaxial LLC, issuing $55.9 million principal
amount at maturity of 12 7/8% senior discount notes due 2008 and (iv) the
Coaxial 10% senior notes and the Coaxial 12 7/8% senior discount notes being
conditionally guaranteed by Insight Ohio.

         Interest on the Coaxial 10% senior notes is payable on February 15 and
August 15 of each year. The indenture governing the Coaxial 10% senior notes
imposes certain limitations on the ability of Coaxial Communications, Phoenix
and Insight Ohio to, among other things, incur debt, make distributions, make
investments and sell assets. Interest on the Coaxial 12 7/8% senior discount
notes does not accrue and is not payable prior to August 15, 2003. Thereafter,
cash interest on the Coaxial 12 7/8% senior discount notes will be payable on
February 15 and August 15 of each year, commencing on February 15, 2004. The
indenture governing the Coaxial 12 7/8% senior discount notes imposes certain
limitations on the ability of Coaxial LLC, Coaxial Financing, Coaxial
Communications and Insight Ohio to, among other things, incur debt, make
distributions, make investments and sell assets. The ability of Coaxial to make
scheduled payments with respect to the 10% senior notes and 12 7/8% senior
discount notes will depend on the financial and operating performance of Insight
Ohio. The distributions on the Series A and B Preferred Interests equal the
interest payments on the senior notes and senior discount notes.

         We have a substantial amount of debt. Our high level of debt could have
important consequences for you. Our investments in our operating subsidiaries,
including Insight Midwest, constitute substantially all of our operating assets.
Consequently, our subsidiaries conduct all of our consolidated operations and
own substantially all of our operating assets. Our principal source of the cash
we need to pay our obligations and to repay the principal amount of our
obligations is the cash that our subsidiaries generate from their operations and
their borrowings. Our subsidiaries are not obligated to make funds available to
us and are restricted by the terms of their indebtedness from doing so. Our
ability to access the cash flow of our subsidiaries may be contingent upon our
ability to refinance the debt of our subsidiaries.

         We believe that the Midwest Holdings Credit Facility, cash on-hand and
our cash flow from operations are sufficient to support our current operating
plan. We intend to continue to draw upon the $170.0 million of unused
availability under the Midwest Holdings Credit Facility as discussed above to
fund any shortfall resulting from the inability of Insight Midwest's cash from
operations to fund its capital expenditures, meet its debt service requirements
or otherwise fund its operations. In addition, as a result of our February 2001
offering of notes, we could provide additional funding support to Insight
Midwest.

         The following table summarizes our contractual obligations as of
December 31, 2001, including periods in which the related payments are due (in
thousands):

<TABLE>
<CAPTION>
                                          2003           2005
                             2002       to 2004        to 2006       Thereafter       Total
                           -------------------------------------------------------------------
<S>                        <C>         <C>            <C>           <C>            <C>
Long-term debt             $      -    $  85,000      $ 188,000     $ 2,432,000    $ 2,705,000
Capital leases                  738        1,476          1,576           3,996          7,786
Operating leases              4,016        6,590          4,750           6,789         22,145
Preferred interests          14,000       35,193        175,387          66,659        291,239
                           -------------------------------------------------------------------
  Total cash obligations   $ 18,754    $ 128,259      $ 369,713     $ 2,509,444    $ 3,026,170
                           ===================================================================
</TABLE>

                                       48

<PAGE>

Recent Accounting Pronouncements

         In July 2001, the FASB issued SFAS No. 141, "Business Combinations,"
which is effective for fiscal years beginning after December 15, 2001 and
requires the purchase method of accounting for business combinations initiated
after June 30, 2001 and eliminates the pooling-of-interests method.

         In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets," which is effective for fiscal years beginning after December
15, 2001 and changes the accounting for goodwill from an amortization method to
an impairment only approach. In addition, the standard includes provisions, upon
adoption, for the reclassification of certain existing recognized intangibles as
goodwill, reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the testing for impairment of existing goodwill and other intangibles. For
existing goodwill and other intangibles, we will adopt this pronouncement on
January 1, 2002. As a result of this adoption, $2.36 billion of goodwill, which
was to be amortized ratably through 2016, will cease. We adopted the
non-amortization provision for goodwill contained within this pronouncement as
of January 1, 2002. Application of the non-amortization provisions of SFAS No.
142 would have resulted in a decrease in net loss of $61.4 million ($1.02 per
share) for the year ended December 31, 2001.

         SFAS No. 142 requires that goodwill be tested annually for impairment
using a two-step process. The first step is to identify a potential impairment
and, in transition, this step must be measured as of the beginning of the fiscal
year. However, we have six months from the date of adoption to complete the
first step. The second step of the goodwill impairment test measures the amount
of the impairment loss, measured as of the beginning of the year of adoption, if
any, and must be completed by the end of our fiscal year. Intangible assets
deemed to have an indefinite life will be tested for impairment using a one-step
process that compares the fair value to the carrying amount of the asset as of
the beginning of the fiscal year, and pursuant to the requirements of SFAS No.
142 will be completed during the first quarter of 2002. Any loss resulting from
the first step impairment test will be reflected as a cumulative effect of a
change in accounting principle in the first quarter of 2002. We have not yet
determined what effect these impairment tests will have on our consolidated
financial position, results of operations and cash flows.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which is effective for fiscal
years beginning after December 15, 2001. SFAS No. 144 supersedes FASB Statement
No. 121, "Accounting for the Impairment or Disposal of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," and the accounting and reporting
provisions relating to the disposal of a segment of a business of Accounting
Principles Board Opinion No. 30. We are currently assessing the impact of SFAS
No. 144 on our consolidated financial position, results of operations and cash
flows.

                                       49

<PAGE>

Critical Accounting Policies

         The methods, estimates and judgments we use in applying our most
critical accounting policies have a significant impact on the results we report
in our consolidated financial statements. We evaluate our estimates and
judgments on an on-going basis. We base our estimates on historical experience
and on assumptions that we believe to be reasonable under the circumstances. Our
experience and assumptions form the basis for our judgments about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Actual results may vary from what we anticipate and different
assumptions or estimates about the future could change our reported results. We
believe the following accounting policies are the most critical to us, in that
they are important to the portrayal of our financial statements and they require
our most difficult, subjective or complex judgments in the preparation of our
consolidated financial statements.

         Fair Value of Assets Acquired and Liabilities Assumed in Purchase
         Combinations

         The purchase combinations carried out by us require management to
estimate the fair value of the assets acquired and liabilities assumed in the
combinations. These estimates of fair value are based on our business plan for
the entities acquired including planned redundancies, restructuring, use of
assets acquired and assumptions as to the ultimate resolution of obligations
assumed for which no future benefit will be received. We also utilize appraisal
reports issued by independent appraisers. Should actual use of assets or
resolution of obligations differ from our estimates, revisions to the estimated
fair values would be required. If a change in estimate occurs after one year of
the acquisition, the change would be recorded in our statement of operations.

         Goodwill and Other Identifiable Intangibles

         We assess the impairment of goodwill and other identifiable intangibles
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. Some factors we consider important which could trigger an
impairment review include the following:

  .  Significant underperformance relative to expected historical or
     projected future operating results;

  .  Significant changes in the manner of our use of the acquired
     assets or the strategy for our overall business; and

  .  Significant negative industry or economic trends.

         When we determine that the carrying value of goodwill and other
identified intangibles may not be recoverable based upon the existence of one or
more of the above indicators of impairment, we measure any impairment based on a
projected discounted cash flow method using a discount rate determined by our
management to be commensurate with the risk inherent in our current business
model. In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets,"
on January 1, 2002 we will cease to amortize goodwill and franchise costs
arising from acquisitions completed prior to July 1, 2001. In lieu of
amortization, we are required to perform an initial impairment review of our
goodwill in 2002 and an annual impairment review thereafter. If we determine
through the impairment review process that goodwill has been impaired, we would
record the impairment charge in our statement of operations.

                                       50

<PAGE>

Investments

         Periodically, we make strategic investments. All marketable securities
are classified as available-for-sale securities and are carried at fair value.
All other equity investments are carried at cost. Each quarter, we assess the
value of these investments by using information acquired from industry trends,
the management of these companies and other external sources. Based on the
information acquired, we record an investment impairment charge when we believe
an investment has experienced a decline in value that is other than temporary.
Future adverse changes in market conditions or poor operating results of
underlying investments could result in losses or an inability to recover the
carrying value of the investments that may not be reflected in an investment's
current carrying value, thereby possibly requiring an impairment charge in the
future.

         Fixed Assets

         Fixed assets include costs capitalized for labor and overhead incurred
in connection with the installation of cable systems and is stated at cost.
Depreciation for buildings, cable system equipment, furniture, fixtures and
office equipment is calculated using the straight-line method over estimated
useful lives ranging from 3 to 30 years. Building improvements are amortized
using the straight-line method over shorter of the remaining terms of the leases
or the estimated lives of the improvements.

         In 2000 we changed the estimated useful lives of fixed assets that
relate to our recent rebuild program. The changes in estimated useful lives were
made to reflect our evaluation of the economic lives of the newly rebuilt plant
in conjunction with industry practice. The weighted average useful lives of such
fixed assets changed from approximately 5 years to approximately 11 years.

     Risk Factors

     We have substantial debt and have significant interest payment
requirements, which may adversely affect our ability to obtain financing in the
future to finance our operations and our ability to react to changes in our
business.

         We have a substantial amount of debt. The following table shows certain
important credit statistics about us.

                                                                  As of
                                                            December 31, 2001
                                                            -----------------
                                                          (dollars in thousands)

Total debt, including preferred interests ...............       $2,728,189
Stockholders' equity ....................................          646,030
Debt to equity ratio ....................................              4.2x

         Our high level of combined debt could have important consequences for
you, including the following:

     .   Our ability to obtain additional financing in the future for capital
         expenditures, acquisitions, working capital or other purposes may be
         limited;

     .   We will need to use a large portion of our revenues to pay interest on
         our borrowings, which will reduce the amount of money available to
         finance our operations, capital expenditures and other activities;

                                       51

<PAGE>

   .   Some of our debt has a variable rate of interest, which exposes us to the
       risk of increased interest rates; and

   .   Our indebtedness may limit our ability to withstand competitive
       pressures and reduce our flexibility in responding to changing business
       and economic conditions.

     Our primary asset is a 50% stake in Insight Midwest, and our sole
business is the management of Insight Midwest's cable television systems. We may
be forced to liquidate Insight Midwest before our 12 1/4% senior discount notes
mature.

         Although our financial statements consolidate the results of Insight
Midwest, we own only 50% of the outstanding partnership interests in Insight
Midwest. The other 50% of Insight Midwest is owned by an indirect subsidiary of
AT&T Broadband, an entity over which we have no control. As a result, although
our financial statements include 100% of the revenues and EBITDA of Insight
Midwest, we are only entitled to share in the results and assets of Insight
Midwest to the extent of our partnership interest. Insight Midwest accounted for
substantially all of our revenues and EBITDA in fiscal 2001. Our 50% interest in
Insight Midwest constitutes substantially all of our operating assets. The only
cash we receive directly from Insight Midwest is a management fee of 3% based on
revenues of the cable television systems and reimbursement of expenses.

         The Insight Midwest partnership agreement provides that at any time
after December 31, 2005 either AT&T Broadband or Insight LP (our wholly-owned
subsidiary that owns our 50% interest in Insight Midwest) will have the right to
cause a split-up of Insight Midwest, subject to a limited right of postponement
held by the non-initiating partner. The split-up would reduce the cash flow from
operations that we need to repay our debt, and could require us to make a change
of control offer which we may be unable to finance.

     We depend upon our operating subsidiaries for cash to fund our obligations.

         Our investments in our operating subsidiaries, including Insight
Midwest, constitute substantially all of our operating assets. Consequently, our
subsidiaries conduct all of our consolidated operations and own substantially
all of our consolidated assets. The principal source of the cash we need to pay
our obligations is the cash that our subsidiaries generate from their operations
and their borrowings. The ability of our operating subsidiaries to generate cash
is subject to general economic, financial, competitive, legislative, regulatory
and other factors that are beyond our control. Accordingly, we cannot assure you
that our subsidiaries will generate cash flow from operations in amounts
sufficient to enable us to pay our indebtedness.

     Our ability to access the cash flow of our subsidiaries may be contingent
upon our ability to refinance the debt of our subsidiaries, and we may be
required to refinance certain indebtedness prior to maturity.

         Our subsidiaries' ability to make payments to us will depend upon their
operating results. Insight Midwest's ability to receive cash from its
subsidiaries is restricted by the terms of the Midwest Holdings credit facility.
The Midwest Holdings credit facility permits Midwest Holdings' subsidiaries to
distribute cash to Insight Midwest, but only so long as there is no default
under such credit facility. The terms of its indebtedness prohibit Insight Ohio
from making distributions to Insight Midwest.

                                       52

<PAGE>

          Even if Insight Midwest receives funds from its subsidiaries, there
can be no assurance that Insight Midwest can or would distribute cash to us to
make payments on the notes due to restrictions imposed by the indentures
governing Insight Midwest's outstanding senior notes and the Insight Midwest
partnership agreement. The indentures governing Insight Midwest's outstanding 10
1/2% senior notes and 9 3/4% senior notes limit Insight Midwest's ability to
distribute cash to us for any purpose. Furthermore, because we only own a 50%
equity interest in Insight Midwest, the Insight Midwest partnership agreement
provides that Insight Midwest may not pay dividends or make other distributions
to us without the consent of our partner, AT&T Broadband. As a result, even if
the creditors of Insight Midwest and its subsidiaries were to permit
distributions to us, AT&T Broadband could prohibit any such distribution.

          As a result, we cannot assure you that we will be able to access the
cash flow of Insight Midwest and its subsidiaries to make payments on our 12
1/4% senior discount notes. If we are unable to refinance the indebtedness of
Insight Midwest and its subsidiaries on terms that provide Insight Midwest with
a greater ability to provide us with funds prior to August 15, 2006, we may not
be able to make payments required under the 12 1/4% senior discount notes.

          Furthermore, borrowings under the Midwest Holdings credit facility are
secured and will mature prior to our and Insight Midwest's outstanding notes.
Accordingly, we may need to refinance all or a portion of our indebtedness on or
before maturity. We cannot assure you that we will be able to refinance any of
our indebtedness on commercially reasonable terms or at all.

     The Midwest Holdings credit facility requires us to comply with various
financial and operating restrictions which could limit our ability to compete as
well as our ability to expand.

          The Midwest Holdings credit facility contains covenants that restrict
Midwest Holdings' subsidiaries ability to:

     .    distribute funds or pay dividends to Insight Midwest;

     .    incur additional indebtedness or issue additional equity;

     .    repurchase or redeem equity interests and indebtedness;

     .    pledge or sell assets or merge with another entity;

     .    create liens; and

     .    make certain capital expenditures, investments or acquisitions.

          Such restrictions could limit our ability to compete as well as our
ability to expand. The ability of Midwest Holdings' subsidiaries to comply with
these provisions may be affected by events beyond our control. If they were to
breach any of these covenants, they would be in default under the credit
facility and they would be prohibited from making distributions to Insight
Midwest.

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

          We have a history of net losses and expect to incur additional net
losses in the future. We reported a net loss before taxes, extraordinary items
and accruals of preferred interests of $115.3 million for the year ended
December 31, 2001 and $116.7 million for the year ended December 31, 2000, on a
pro forma basis after giving effect to the AT&T transactions.

                                       53

<PAGE>

          We have and will continue to have a substantial amount of interest
expense in respect of debt incurred and depreciation and amortization expenses
relating to acquisitions of cable systems as well as expansion and upgrade
programs. Such expenses have contributed to the net losses we experienced. We
expect that we will continue to incur such non-operating expenses at increased
levels as a result of our recent acquisitions and our network upgrade program,
which expenses will result in continued net losses.

     We have a limited history of operating our current cable television systems
and these systems may not generate sales at or exceeding historical levels.

          We are still in the process of integrating our newly purchased
Illinois systems. The historical financial information of our systems may not
fully indicate our future operating results. This makes it difficult for you to
completely evaluate our performance.

     Our programming costs are substantial and they may increase, which could
result in a decrease in profitability if we are unable to pass that increase on
to our customers.

          In recent years the cable industry has experienced a rapid escalation
in the cost of programming, and sports programming in particular. For 1998
through 2001, programming costs increased significantly. Our cable programming
services are dependent upon our ability to procure programming that is
attractive to our customers at reasonable rates. Programming costs may continue
to escalate and we may not be able to pass programming cost increases on to our
customers. Our financial condition and results of operations could be negatively
affected by further increases in programming costs. Programming has been and is
expected to continue to be our largest single expense item and accounted for
approximately 45% of the total operating expenses for our systems for the year
ended December 31, 2001.

     The competition we face from other cable networks and alternative service
providers may cause us to lose market share.

          The impact from competition, particularly from direct broadcast
satellite television systems and companies that overbuild in our market areas,
has resulted in a decrease in customer growth rates as well as a loss of
subscribers. The industry growth rate for basic customers for the years ended
December 2001 and 2000 was 5.2% and 1.8% respectively, while satellite
penetration as of December 2001 averaged 17.5% nationwide, up from 17.1% in
December 2000. This in turn has negatively impacted our financial performance.
Increased competition may continue to impact our financial performance. Many of
our potential competitors have substantially greater resources than we do, and
we cannot predict the market share our competitors will eventually achieve, nor
can we predict their ability to develop products which will compete with our
planned new and enhanced products and services such as high-speed data access,
video-on-demand and telephone services.

          Direct broadcast satellite service consists of television programming
transmitted via high-powered satellites to individual homes, each served by a
small satellite dish. Legislation permitting direct broadcast satellite
operators to transmit local broadcast signals was enacted on November 29, 1999.
This eliminates a significant competitive advantage that cable system operators
have had over direct broadcast satellite operators. Direct broadcast satellite
operators have begun delivering local broadcast signals in the largest markets
and there are plans to expand such carriage to many more markets over the next
year.

          Since our cable systems are operated under non-exclusive franchises,
competing operators of cable systems and other potential competitors, such as
municipalities and municipal utility providers, may be granted franchises to
build cable systems in markets where we hold franchises. Competition in

                                       54

<PAGE>

geographic areas where a secondary franchise is obtained and a cable network is
constructed is called "overbuilding." As of December 31, 2001, approximately
8.7% of the homes passed by our cable systems were overbuilt. An affiliate of
Southern Indiana Gas and Electric Co. has overbuilt our Evansville, Indiana
system and passes approximately 77,100 homes also passed by us. In addition,
Knology, Inc. and TotaLink of Kentucky LLC have each obtained a franchise to
provide cable television service in the City of Louisville, Kentucky, where we
operate a system, although these companies have not constructed cable systems.
TotaLink of Kentucky, LLC is also in discussions with the Jefferson County local
franchising authority to obtain a franchise to provide cable television in the
same area as our system. In addition, WideOpenWest has overbuilt our Columbus,
Ohio system and passes approximately 130,000 homes also passed by us. In our
Illinois system, the city of Springfield is considering a municipal overbuild.
We cannot predict what effect competition from these or future competitors will
have on our business and operations.

     We will face competition from providers of alternatives to our Internet
and telephone services.

          Several telephone companies are introducing digital subscriber line
technology (also known as DSL), which allows Internet access over traditional
phone lines at data transmission speeds greater than those available by a
standard telephone modem. Although these transmission speeds are not as great as
the transmission speeds of a cable modem, we believe that the transmission
speeds of digital subscriber line technology are sufficiently high that such
technology will compete with cable modem technology. We cannot predict the
impact DSL technology will have on our Internet access services or on our
operations.

          As we expand our offerings to include telephone services, our AT&T
Digital Phone branded telephone services will be subject to competition from
existing providers, including both local exchange telephone companies and
long-distance carriers. We cannot predict the extent to which the presence of
these competitors will influence customer penetration in our telephone service
areas.

          We expect that the most significant competitors for our Internet
access and telephone service offerings will be the existing local exchange
telephone companies as well as resellers using the local exchange telephone
companies' communications networks. These competitors are currently the
predominant providers of Internet and telephone services in our markets.

     We may be required to provide access to our networks to other Internet
service providers, which could significantly increase our competition and
adversely affect our ability to provide new products and services.

          The U.S. Congress and the Federal Communications Commission have been
asked to require cable operators to provide access over their cable systems to
other Internet service providers. If we are required to provide open access, it
could prohibit us from entering into or limit our existing agreements with
Internet service providers, adversely impact our anticipated revenues from
high-speed Internet access services and complicate marketing and technical
issues associated with the introduction of these services. To date, the U.S.
Congress and the Federal Communications Commission have declined to impose these
requirements although the FCC has recently issued a notice of proposed
rulemaking on this matter. This same open access issue is also being considered
by some local franchising authorities and several courts. Franchise renewals and
transfers could become more difficult depending upon the outcome of this issue.

     Our business has been and continues to be subject to extensive governmental
legislation and regulation, and changes in this legislation and regulation could
increase our costs of compliance and reduce the profitability of our business.

                                       55

<PAGE>

          The cable television industry is subject to extensive legislation and
regulation at the federal and local levels, and, in some instances, at the state
level, and many aspects of such regulation are currently the subject of judicial
proceedings and administrative or legislative proposals. Operating in a
regulated industry increases the cost of doing business generally. We may also
become subject to additional regulatory burdens and related increased costs. As
we continue to introduce additional communications services, we may be required
to obtain federal, state and local licenses or other authorizations to offer
such services. We may not be able to obtain such licenses or authorizations in a
timely manner, or at all, or conditions could be imposed upon such licenses and
authorizations that may not be favorable to us.

     Members of management, as major stockholders, possess unequal voting rights
resulting in the ability to control all major corporate decisions, and other
stockholders may be unable to influence these corporate decisions.

          We have two classes of common stock -- Class A which carries one vote
per share and Class B which carries ten votes per share. Our directors,
executive officers, members of management and family members own all of the
outstanding Class B common stock. As a result of their stock ownership, such
holders of Class B common stock will have the power to elect all of our
directors and control stockholder decisions on other matters such as amendments
to our certificate of incorporation and bylaws, and mergers or other fundamental
corporate transactions. The interests of our controlling stockholders, including
our management, may conflict with the interests of the other holders of Class A
common stock.

          The disproportionate voting rights of the Class A common stock
relative to the Class B common stock may make us a less attractive target for a
takeover than we otherwise might be or render more difficult or discourage a
merger proposal or a tender offer.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

          Our revolving credit and term loan agreements bear interest at
floating rates. Accordingly, we are exposed to potential losses related to
changes in interest rates. We do not enter into derivatives or other financial
instruments for trading or speculative purposes. In order to manage our exposure
to interest rate risk, we enter into derivative financial instruments, typically
interest rate swaps and collars. The counter-parties to our swap and collar
agreements are major financial institutions. As of December 31, 2001, our
interest rate swap and collar agreements expire in varying amounts through July
2003.

          The fair market value and carrying value of our 9 3/4% senior notes,
10 1/2% senior notes and 12 1/4 senior discount notes was $984.0 million and
$937.5 million as of December 31, 2001. The fair market value of our credit
facility borrowings approximates its carrying value as the credit facility
borrowings bear interest at floating rates of interest. As of December 31, 2001,
the estimated fair value (cost if terminated) of our interest rate swap and
collar agreements was approximately $(22.8) million, which represents the amount
required to enter into offsetting contracts with similar remaining maturities
based on quoted market prices and is reflected in our financial statements as
other non-current liabilities. Changes in the fair value of derivative financial
instruments are either recognized in income or in stockholders' equity as a
component of other comprehensive loss depending on whether the derivative
financial instruments qualify for hedge accounting.

          As of December 31, 2001, we had entered into interest rate swaps that
approximated $500.0 million, or 31.2%, of our borrowings under all of our credit
facilities. A hypothetical 100 basis point increase in interest rates along the
entire interest rate yield curve would increase our annual interest expense by
approximately $11.1 million.

                                       56

<PAGE>

Item 8.  Financial Statements and Supplementary Data

             Reference is made to our consolidated financial statements
beginning on page F-1 of this report.


Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

             None.

                                       57

<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

             Information called for by Item 10 is set forth under the heading
"Executive Officers of the Registrant" in Part I hereof and in "Election of
Directors" in our proxy statement relating to the 2002 Annual Meeting of
Stockholders, which is incorporated herein by this reference.

Item 11. Executive Compensation

             Information called for by Item 11 is set forth under the heading
"Executive Compensation" in the proxy statement, which is incorporated herein by
this reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

             Information called for by Item 12 is set forth under the heading
"Security Ownership of Certain Beneficial Owners and Management" in the proxy
statement, which is incorporated herein by this reference.

Item 13. Certain Relationships and Related Transactions

             Information called for by Item 13 is set forth under the heading
"Election of Directors--Certain Transactions" in the proxy statement, which is
incorporated herein by this reference.

                                       58

<PAGE>

                                     PART IV

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

         (a)  Financial Statements:

         Our financial statements, as indicated by the Index to Consolidated
Financial Statements set forth below, begin on page F-1 of this Form 10-K, and
are hereby incorporated by reference. Financial statement schedules have been
omitted because they are not applicable or the required information is included
in the financial statements or notes thereto.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            Page

Report of Independent Auditors ........................................     F-1

Insight Communications Company, Inc.
   Consolidated Balance Sheets as of
   December 31, 2001 and 2000 .........................................     F-2

Insight Communications Company, Inc.
   Consolidated Statements of Operations
   for the years ended December 31, 2001,
   2000 and 1999 ......................................................     F-3

Insight Communications Company, Inc.
   Consolidated Statements of Changes
   In Partners' Deficit/Stockholders'
   Equity for the years ended December 31,
   2001, 2000 and 1999 ................................................     F-4

Insight Communications Company, Inc.
   Consolidated Statements of Cash Flows
   for the years ended December 31, 2001,
   2000 and 1999 ......................................................     F-5

Insight Communications Company, Inc.
   Notes to Consolidated Financial
   Statements .........................................................     F-6

         (b)  Reports on Form 8-K:

         We did not file any reports on Form 8-K during the fourth quarter of
the year ended December 31, 2001.

                                       59

<PAGE>

        (c) Exhibits
Exhibit
Number      Exhibit Description
------      -------------------

  2.1       Purchase Agreement, dated as of April 18, 1999, among InterMedia
               Capital Management VI, LLC, InterMedia Management Inc., Robert J.
               Lewis, TCI ICM VI, Inc., InterMedia Capital Management VI, L.P.,
               Blackstone KC Capital Partners, L.P., Blackstone KC Offshore
               Capital Partners, L.P., Blackstone Family Investment Partnership
               III L.P., Leo J. Hindery, Jr., TCI IP-VI, LLC and Insight
               Communications Company, L.P. (1)
  2.2       Contribution and Formation Agreement, dated April 18, 1999, between
               TCI of Indiana Holdings, LLC and Insight Communications Company,
               L.P. (1)
  2.3       Purchase and Option Agreement, dated as of August 8, 2000, among
               Coaxial Communications of Central Ohio, Inc., Insight
               Communications of Central Ohio, LLC, Insight Holdings of Ohio,
               LLC, Insight Communications Company, L.P., Insight Communications
               Company, Inc., Coaxial LLC, Coaxial DJM LLC, Coaxial DSM LLC,
               Barry Silverstein, Dennis J. McGillicuddy, and D. Stevens McVoy
               (2)
  2.4       Asset Contribution Agreement, dated August 15, 2000, by and among,
               Command Cable of Eastern Illinois Limited Partnership, MediaOne
               of Illinois, Inc., Northwest Illinois TV Cable Company, S/D Cable
               Partners, Ltd., TCI American Cable Holdings, L.P., TCI of
               Bloomington/Normal, Inc., TCI Cablevision of Texas, Inc., UACC
               Midwest, Inc., United Cable Television of Illinois Valley, Inc.,
               United Cable Television of Southern Illinois, Inc., TCI of
               Indiana Holdings, LLC, Insight Communications Company, L.P. and
               Insight Midwest, L.P. ("Asset Contribution Agreement") (3)
  2.5       Amendment to the Asset Contribution Agreement, dated January 5,
               2001 (4)
  2.6       Asset Exchange Agreement, dated August 15, 2000, by and between
               MediaOne of Illinois, Inc. and Insight Communications Company,
               L.P. ("Asset Exchange Agreement") (3)
  2.7       Amendment to the Asset Exchange Agreement, dated January 5, 2001 (4)
  2.8       Asset Purchase and Sale Agreement, dated August 15, 2000, by and
               between TCI of Illinois, Inc., TCI of Racine, Inc., UACC Midwest,
               Inc. and Insight Communications Company, L.P. ("Asset Purchase
               and Sale Agreement") (3)
  2.9       Amendment to the Asset Purchase and Sale Agreement, dated January 5,
               2001 (4)
  3.1       Restated Certificate of Incorporation of Registrant (1)
  3.2       By-laws of Registrant (1)
 10.1       1999 Stock Option Plan of Registrant (1)
 10.2       Credit Agreement, dated as of January 5, 2001, among Insight Midwest
               Holdings, LLC, several banks and financial institutions or
               entities, and The Bank of New York, as administrative agent (4)
 10.3       Second Amended and Restated Operating Agreement of Insight
               Communications Midwest, LLC, dated as of January 5, 2001(9)
 10.4       Amended and Restated Management Agreement by and between Insight
               Communications of Indiana, LLC (now known as Insight
               Communications Midwest, LLC) and Insight Communications Company,
               L.P., dated as of October 1, 1999 (5)
 10.5       First Amendment to Amended and Restated Management Agreement dated
               as of January 5, 2001, by and between Insight Communications
               Midwest, LLC and Insight Communications Company, L.P.(9)
 10.6       Amended and Restated Limited Partnership Agreement of Insight
               Kentucky Partners II, L.P., dated as of October 1, 1999(9)
 10.7       First Amendment to Amended and Restated Limited Partnership
               Agreement of Insight Kentucky Partners II, L.P., dated as of
               January 5, 2001(9)
 10.8       Management Agreement by and between Insight Kentucky Partners II,
               L.P. and Insight Communications Company, L.P., dated as of
               October 1, 1999 (5)

                                       60

<PAGE>

 10.9       Amended and Restated Operating Agreement of Insight Ohio, dated as
               of August 8, 2000 (2)
 10.10      Amended and Restated Limited Partnership Agreement of Insight
               Midwest, L.P., dated January 5, 2001 (4)
 10.11      Indenture relating to 93/4% senior notes of Insight Midwest, L.P.
               and Insight Capital, Inc., dated as of October 1, 1999 (6)
 10.12      Indenture relating to 10 1/2senior notes of Insight Midwest, L.P.
               and Insight Capital, Inc., dated as of November 6, 2000(9)
 10.13      Indenture relating to 10% senior notes of Coaxial Communications
               of Central Ohio, Inc. and Phoenix Associates, dated as of August
               21, 1998 (7)
 10.14      Indenture relating to 12 7/8% senior discount notes of Coaxial LLC
               and Coaxial Financing Corp., dated as of August 21, 1998 (8)
 10.15      Indenture relating to 12.25% senior discount notes of Registrant,
               dated as of February 6, 2001(9)
 10.16      Revolving Credit Agreement dated as of October 7, 1998 among Insight
               Communications of Central Ohio, LLC, several banks and financial
               institutions or entities, and Canadian Imperial Bank of Commerce,
               as administrative agent (8)
 10.17      Security holders Agreement by and among Registrant, Vestar Capital
               Partners III, L.P., Sandler Capital Partners IV, L.P., Sandler
               Capital Partners IV FTE, L.P., Sidney R. Knafel, Michael S.
               Willner, Kim D. Kelly and Senior Management Securityholders,
               dated as of May 11, 1999, with Side Letter Agreement by and among
               Insight Communications Company, L.P., Vestar Capital Partners
               III, L.P., Sidney R. Knafel, Michael S. Willner, Kim D. Kelly,
               Sandler Capital Partners IV, L.P. and Sandler Capital Partners IV
               FTE, L.P., dated May 11, 1999 (the "Letter Agreement") (1)
 10.18      Amendment, dated July 16, 1999 to the Letter Agreement (1)
 10.19      Cable Facilities Lease Agreement, dated July 17, 2000, among AT&T
               Broadband, LLC, Registrant and certain of Registrant's affiliates
               (portions of this exhibit have been omitted and filed separately
               with the SEC pursuant to a request for confidential treatment)
               (2)
 10.20      Amended and Restated Consulting Agreement, dated as of March 17,
               2000, by and between InterMedia Partners Southeast and Insight
               Communications Company, L.P.(5)
 10.21      Employment Agreement of Elliot Brecher(9)
 21.1       Subsidiaries of the Registrant
 23.1       Consent of Ernst & Young LLP

-------------------
(1)     Filed as an exhibit to Registrant's Registration Statement on Form S-1
        (Registration Statement No. 333-78293) and incorporated herein by
        reference.
(2)     Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for
        the quarterly period ended June 30, 2000 and incorporated herein by
        reference.
(3)     Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
        August 15, 2000, and incorporated herein by reference.
(4)     Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
        January 5, 2001, and incorporated herein by reference.
(5)     Filed as an exhibit to the Registration Statement on Form S-4 of Insight
        Midwest, L.P. and Insight Capital, Inc. (Registration No. 333- 33540)
        and incorporated herein by reference.
(6)     Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
        year ended December 31, 1999 and incorporated herein by reference.
(7)     Filed as an exhibit to the Registration Statement on Form S-4 of Coaxial
        Communications of Central Ohio, Inc., Phoenix Associates and Insight
        Communications of Central Ohio, LLC (Registration No. 333- 63677) and
        incorporated herein by reference.

                                       61

<PAGE>

(8)   Filed as an exhibit to the Registration Statement on Form S-4 of Coaxial
      LLC, Coaxial Financing Corp., and Insight Communications of Central Ohio,
      LLC (Registration No. 333- 64449) and incorporated herein by reference.
(9)   Filed as an Exhibit to Registrant's Annual Report on Form 10-K for the
      year ended December 31, 2000 and incorporated herein by reference.

                                       62

<PAGE>

                                   SIGNATURES

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

                                           Insight Communications Company, Inc.

Date: March 27, 2002                       By:/s/ Michael S. Willner
                                              ------------------------------
                                               Michael S. Willner, President and
                                               Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signatures                           Title                                                         Date
----------                           -----                                                         ----
<S>                                  <C>                                                           <C>
/s/ Sidney R. Knafel
-----------------------------        Chairman of the Board                                         March 27, 2002
Sidney R. Knafel

/s/ Michael S. Willner
-----------------------------        President, Chief Executive Officer and                        March 27, 2002
Michael S. Willner                   Director (Principal Executive Officer


/s/ Kim D. Kelly
-----------------------------        Executive Vice President, Chief Operating                     March 27, 2002
Kim D. Kelly                         Officer and Director


/s/ Dinesh C. Jain
-----------------------------        Senior Vice President and Chief Financial Officer             March 27, 2002
Dinesh C. Jain                       (Principal Financial Officer)

/s/ Daniel Mannino
-----------------------------        Senior Vice President and Controller                          March 27, 2002
Daniel Mannino                       (Principal Accounting Officer)

/s/ Thomas L. Kempner
-----------------------------        Director                                                      March 27, 2002
Thomas L. Kempner

/s/ James S. Marcus
-----------------------------        Director                                                      March 27, 2002
James S. Marcus

/s/ Prakash A. Melwani
-----------------------------        Director                                                      March 27, 2002
Prakash A. Melwani

/s/ Daniel S. O'Connell
-----------------------------        Director                                                      March 27, 2002
Daniel S. O'Connell
</TABLE>


                                       63

<PAGE>

                         Report of Independent Auditors

The Stockholders and Board of Directors
Insight Communications Company, Inc.

We have audited the accompanying consolidated balance sheets of Insight
Communications Company, Inc. (the "Company") as of December 31, 2001 and 2000,
and the related consolidated statements of operations, changes in partners'
deficiency/stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

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

                                                       /s/ Ernst & Young LLP

New York, New York
March 12, 2002

                                      F-1

<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.
                          CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                         December 31,            December 31,
                                                                                             2001                    2000
                                                                                     ----------------------  ----------------------
<S>                                                                                     <C>                     <C>
Assets
Cash and cash equivalents                                                               $    198,548            $     33,733
Investments                                                                                   18,080                  27,846
Trade accounts receivable, net of allowance for doubtful accounts of $2,818 and
   $1,326 as of December 31, 2001 and 2000                                                    22,918                  18,169
Launch funds receivable                                                                       12,980                  16,123
Prepaid expenses and other assets                                                             18,363                  12,178
                                                                                     ----------------------  ----------------------
   Total current assets                                                                      270,889                 108,049

Fixed assets, net                                                                          1,151,709                 820,888
Intangible assets, net                                                                     2,397,053               1,270,632
Deferred financing costs, net of accumulated amortization of $5,259 and $3,537 as
   of December 31, 2001 and 2000                                                              32,294                  28,165
Other non-current assets                                                                      15,447                  16,852
                                                                                     ----------------------  ----------------------
   Total assets                                                                         $  3,867,392            $  2,244,586
                                                                                     ======================  ======================

Liabilities and stockholders' equity
Accounts payable                                                                        $     67,095            $     46,158
Accrued expenses and other liabilities                                                        23,793                  12,191
Accrued property taxes                                                                        11,030                  11,698
Accrued programming costs                                                                     24,287                  23,527
Deferred revenue                                                                               8,673                   4,069
Interest payable                                                                              21,940                  20,705
Preferred interest distribution payable                                                        5,250                   5,250
                                                                                     ----------------------  ----------------------
   Total current liabilities                                                                 162,068                 123,598

Deferred revenue                                                                              12,262                  14,605
Deferred income taxes                                                                              -                  60,824
Debt                                                                                       2,542,476               1,372,523
Other non-current liabilities                                                                 62,964                       -

Commitments and contingencies

Minority interest                                                                            255,879                 (47,925)
Preferred interests                                                                          185,713                 180,281

Stockholders' equity:
Preferred stock; $.01 par value; 100,000,000 shares authorized; no shares issued
   and outstanding as of December 31, 2001 and 2000                                                -                       -
Common stock; $.01 par value:
   Class A - 300,000,000 shares authorized; 50,266,162 and 49,957,180 shares issued
     and outstanding as of December 31, 2001 and 2000                                            502                     500
   Class B - 100,000,000 shares authorized; 9,977,537 and 10,226,050 shares issued
     and outstanding as of December 31, 2001 and 2000                                            100                     102
Additional paid-in-capital                                                                   851,936                 655,253
Accumulated deficit                                                                         (189,964)               (115,175)
Accumulated other comprehensive loss                                                         (16,544)                      -
                                                                                     ----------------------  ----------------------
   Total stockholders' equity                                                                646,030                 540,680
                                                                                     ----------------------  ----------------------
   Total liabilities and stockholders' equity                                           $  3,867,392            $  2,244,586
                                                                                     ======================  ======================
</TABLE>

                             See accompanying notes

                                      F-2

<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                                   -----------------------------------
                                                                      2001        2000         1999
                                                                   ---------    ---------    ---------
<S>                                                                <C>          <C>          <C>
Revenue                                                            $ 704,379    $ 476,186    $ 242,693

Operating costs and expenses:
   Programming and other operating costs                             258,934      170,071       73,208
   Selling, general and administrative                               129,044       92,014       53,946
   Non-recurring high-speed data charges                               3,785            -            -
   Non-cash compensation and related charges                               -            -       19,285
   Depreciation and amortization                                     383,449      236,242      131,308
                                                                   ---------    ---------    ---------
Total operating costs and expenses                                   775,212      498,327      277,747
                                                                   ---------    ---------    ---------

Operating loss                                                       (70,833)     (22,141)     (35,054)

Other income (expense):
   Gain (loss) on cable systems exchange                              34,178         (956)      15,799
   Interest expense                                                 (213,045)    (115,524)     (57,053)
   Interest income                                                     7,315        5,771        6,655
   Other                                                              (2,320)        (294)        (345)
                                                                   ---------    ---------    ---------
Total other expense, net                                            (173,872)    (111,003)     (34,944)

Loss before minority interest, investment activity, income
   taxes and extraordinary item                                     (244,705)    (133,144)     (69,998)
Minority interest                                                    141,314       67,773       31,339
Equity in losses of investees                                         (2,031)      (3,830)     (13,963)
Impairment write-down of investments                                  (9,899)     (88,554)           -
Gain on sale of equity investment                                          -       80,943            -
                                                                   ---------    ---------    ---------
Loss before income taxes and extraordinary item                     (115,321)     (76,812)     (52,622)
Benefit (provision) for income taxes                                  46,618       33,825      (31,586)
                                                                   ---------    ---------    ---------
Loss before extraordinary item                                       (68,703)     (42,987)     (84,208)
Extraordinary loss from early extinguishment of debt, net of tax      (6,086)           -            -
                                                                   ---------    ---------    ---------
Net loss                                                             (74,789)     (42,987)     (84,208)
Accrual of preferred interests                                       (19,432)     (18,725)      (7,118)
                                                                   ---------    ---------    ---------
Net loss attributable to common stockholders                       $ (94,221)   $ (61,712)   $ (91,326)
                                                                   =========    =========    =========

Basic and diluted loss per share before extraordinary item         $   (1.47)   $   (1.03)   $   (2.58)
Basic and diluted loss per share related to extraordinary item     $    (.10)   $       -    $       -
Basic and diluted loss per share attributable to common
   stockholders                                                    $   (1.57)   $   (1.03)   $   (2.58)
Basic and diluted weighted average shares outstanding                 60,202       59,703       35,417
</TABLE>

                             See accompaning notes

                                      F-3

<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.
                       CONSOLIDATED STATEMENTS OF CHANGES
                   IN PARTNERS' DEFICIT/STOCKHOLDERS' EQUITY
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                                             Accumulated
                                                                                    Additional                  Other
                                               General     Limited       Common      Paid-in    Accumulated Comprehensive
                                               Partner     Partners      Stock       Capital      Deficit   Income (Loss)    Total
                                             ---------------------------------------------------------------------------------------
<S>                                          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Balance at January 1, 1999                   $    (527)   $  (7,401)                                                       $ (7,928)

   Net loss                                       (120)     (11,900)                             $ (72,188)                 (84,208)
   Unrealized gain on investments                                                                             $   3,168       3,168
                                                                                                                           ---------
   Total comprehensive loss                                                                                                 (81,040)
                                                                                                                           ---------
   Accretion of redeemable Class B
     units                                         (71)      (7,047)                                                         (7,118)
   Recapitalization                                718       26,348    $     219    $ (27,285)                                    -
   Issuance of common stock in
     exchange for redeemable units                                           110       58,327                                58,437
   Compensation associated with
     issuance of common stock to
     employees                                                                         18,715                                18,715
   Issuance of common stock in
     initial public offering                                                 265      606,729                               606,994
                                             ---------------------------------------------------------------------------------------
Balance at December 31, 1999                         -            -          594      656,486      (72,188)       3,168     588,060

   Net loss                                                                                        (42,987)                 (42,987)
   Impairment of investments                                                                                     (3,168)     (3,168)
                                                                                                                           ---------
   Total comprehensive loss                                                                                                 (46,155)
                                                                                                                           ---------
   Issuance of common stock in
     acquisition of equity interest                                            8       17,492                                17,500
   Accrual of preferred interests                                                     (18,725)                              (18,725)
                                             ---------------------------------------------------------------------------------------
Balance at December 31, 2000                         -            -          602      655,253     (115,175)           -     540,680

   Net loss                                                                                        (74,789)                 (74,789)
   Unrealized loss on investments                                                                                (3,118)     (3,118)
   Transition adjustment loss on
     adoption of SFAS No. 133, net
     of tax                                                                                                      (1,108)     (1,108)
   Unrealized loss on interest rate
     swaps, net of tax                                                                                          (12,318)    (12,318)
                                                                                                                           ---------
   Total comprehensive loss                                                                                                 (91,333)
                                                                                                                           ---------
   Issuance of common stock to                                                            768                                   768
     401(k) plan
   Issuance of common stock through
     exercise of stock options and
     as stock compensation                                                                399                                   399
   Contribution of capital
     associated with AT&T
     transactions (Note 3)                                                            214,948                               214,948
   Accrual of preferred interests                                                     (19,432)                              (19,432)
                                             ---------------------------------------------------------------------------------------
Balance at December 31, 2001                 $       -    $       -    $     602    $ 851,936    $(189,964)   $ (16,544)   $646,030
                                             =======================================================================================
</TABLE>

                             See accompanying notes

                                      F-4

<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                     Year Ended December 31,
                                                                            -----------------------------------------
                                                                                2001           2000          1999
                                                                            -----------    -----------    -----------
<S>                                                                         <C>            <C>            <C>
Operating activities:
   Net loss                                                                 $   (74,789)   $   (42,987)   $   (84,208)
   Adjustments to reconcile net loss to net cash
   provided by operating activities:
     Depreciation and amortization                                              383,449        236,242        131,308
     Non-cash compensation                                                            -              -         18,715
     Equity in losses of investees                                                2,031          3,830         13,963
     Impairment of investments                                                    9,899         88,554              -
     Loss (gain) on cable systems exchange                                      (34,178)           956        (15,799)
     Gain on sale of equity investment                                                -        (80,943)             -
     Extraordinary loss from early extinguishment of debt, net of tax             6,086              -              -
     Minority interest                                                         (141,314)       (67,774)       (31,339)
     Provision for losses on trade accounts receivable                           12,093          8,655          3,038
     Contribution of stock to 401(k) Plan                                           768              -              -
     Amortization of note discount                                               24,770           (722)             -
     Deferred income taxes                                                      (47,266)       (33,825)        31,328
     Changes in operating assets and liabilities, net of the
     effect of acquisitions:
       Trade accounts receivable                                                (13,375)       (14,012)         7,225
       Launch fund receivable                                                     3,111         (9,052)        (5,597)
       Prepaid expenses and other assets                                         (5,631)         2,111        (19,187)
       Accounts payable                                                          20,937         (7,409)        11,922
       Accrued expenses and other liabilities                                    14,734          8,008         35,079
                                                                            -----------    -----------    -----------
   Net cash provided by operating activities                                    161,325         91,632         96,448
                                                                            -----------    -----------    -----------

Investing activities:
   Purchase of fixed assets                                                    (325,581)      (262,241)      (135,929)
   Purchase of intangible assets                                                 (3,069)        (3,978)        (9,209)
   Investment in equity securities                                              (10,725)       (11,873)       (29,337)
   Purchase of cable television systems, net of cash acquired                  (463,500)        (1,718)      (342,012)
                                                                            -----------    -----------    -----------
   Net cash used in investing activities                                       (802,875)      (279,810)      (516,487)
                                                                            -----------    -----------    -----------

Financing activities:
   Net proceeds from initial public offering                                          -              -        606,994
   Distributions of preferred interests                                         (14,000)       (14,000)             -
   Proceeds from borrowings under credit facilities                           1,580,000        124,400         22,000
   Repayment of credit facilities                                              (654,900)      (488,500)      (307,634)
   Proceeds from issuance of notes                                              220,084        492,500        200,000
   Exercise of stock options                                                        223              -              -
   Repayment of debt associated with cable system transactions                 (306,158)             -              -
   Principal payments on capital leases and other non-current liabilities          (574)             -              -
   Debt issuance costs                                                          (18,310)        (6,000)        (7,712)
                                                                            -----------    -----------    -----------
   Net cash provided by financing activities                                    806,365        108,400        513,648
                                                                            -----------    -----------    -----------

Net increase (decrease) in cash and cash equivalents                            164,815        (79,778)        93,609
Cash and cash equivalents, beginning of year                                     33,733        113,511         19,902
                                                                            -----------    -----------    -----------
Cash and cash equivalents, end of year                                      $   198,548    $    33,733    $   113,511
                                                                            ===========    ===========    ===========
</TABLE>

                                      F-5

<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

On July 26, 1999, we completed our initial public offering ("IPO") of Class A
common stock in which we sold approximately 26.5 million shares of our common
stock. Offering proceeds net of underwriting discounts and other offering
expenses totaled $607.0 million and were applied primarily toward the repayment
of senior indebtedness and to finance the October 1, 1999 acquisition of the
Kentucky Systems (Note 3). Prior to the IPO, we operated as a limited
partnership. We were reconstituted as a corporation upon the completion of our
IPO, at which time all of the limited partnership's units were exchanged for
shares of common stock.

Through our wholly owned subsidiary, Insight Communications Company, L.P.
("Insight LP"), we own a 50% interest in Insight Midwest, L.P. ("Insight
Midwest"), which through its subsidiaries, Insight Communications Midwest, LLC
("Insight Communications Midwest"), Insight Communications of Kentucky, L.P.
("Insight Kentucky") and Insight Communications of Central Ohio, LLC ("Insight
Ohio"), owns and operates cable television systems in Indiana, Kentucky, Ohio,
Illinois and Georgia which passed approximately 2.2 million homes and served
approximately 1.3 million customers as of December 31, 2001. Our other wholly
owned subsidiary, Insight Interactive LLC ("Insight Interactive") owns a 50%
equity interest in SourceSuite LLC (Note 5), which is accounted for under the
equity method of accounting.


2. Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include our accounts and those of our
wholly owned subsidiaries. Insight Midwest is equally owned by Insight LP and by
AT&T Broadband, LLC, through its indirect subsidiary TCI of Indiana Holdings,
LLC (collectively "AT&T Broadband"). Insight LP is the general partner of
Insight Midwest and effectively controls all operating and financial decisions
pertaining to Insight Midwest. Accordingly, the results of Insight Midwest are
included in our consolidated financial statements. Through Insight LP, we manage
all of Insight Midwest's systems and also manage systems owned by an affiliate
of AT&T Broadband. The minority interest represents AT&T Broadband's 50%
ownership interest in Insight Midwest. Inter-company balances and transactions
have been eliminated in consolidation.

Revenue Recognition

Revenue includes fees received for service, connections and providing
advertising spots. Service fees are recorded in the month the services are
provided to customers. Connection fees are charged for the hook-up of new
customers and are recognized as current revenues. Advertising fees are recorded
in the month advertising spots are aired.

                                      F-6

<PAGE>

2. Significant Accounting Policies (continued)

Use of Estimates

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

Cash Equivalents

We consider all highly liquid investments with original maturities of three
months or less to be cash equivalents.

Investments

Investments consist of debt and equity securities (Note 5). All marketable
investments are classified as available-for-sale under Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". In accordance with SFAS No. 115, available-for-sale
securities are carried at fair value, with unrealized gains and losses, net of
income taxes, reported as a separate component of stockholders' equity. Fair
value is based on quoted market prices. The amortized cost of debt securities is
adjusted for the accretion of discounts. Such accretion, as well as interest, is
included in interest income. All other equity investments are carried at cost.

Fixed Assets

Fixed assets include costs capitalized for labor and overhead incurred in
connection with the installation of cable systems and is stated at cost (Note
6). Depreciation for buildings, cable system equipment, furniture, fixtures and
office equipment is calculated using the straight-line method over estimated
useful lives ranging from 3 to 30 years. Building improvements are amortized
using the straight-line method over shorter of the remaining terms of the leases
or the estimated lives of the improvements.

The carrying value of fixed assets is reviewed if facts and circumstances
suggest that they may be impaired. If this review indicates that the carrying
value of the fixed assets will not be recovered from our undiscounted future
cash flows, an impairment loss would be recognized for the amount that the
asset's carrying value exceeds its fair value. We believe that no impairment of
fixed assets existed as of December 31, 2001 or 2000.

Effective January 1, 2000, we changed the estimated useful lives of fixed assets
that relate to our recent rebuild program. The changes in estimated useful lives
were made to reflect our evaluation of the economic lives of the newly rebuilt
plant in conjunction with industry practice. The weighted average useful lives
of such fixed assets changed from approximately 5 years to approximately 11
years. This

                                      F-7

<PAGE>

2. Significant Accounting Policies (continued)

change was made on a prospective basis and resulted in a reduction of our net
loss for the year ended December 31, 2000 of $13.3 million or $0.22 per share.

Depreciation expense for the years ended December 31, 2001, 2000 and 1999 was
$182.5 million, $135.9 million and $64.8 million.

Intangible Assets

Intangible assets consist of franchise costs and goodwill (Note 6). Costs
incurred in negotiating and renewing franchise agreements are capitalized and
amortized over the life of the franchise agreements. Franchise costs and
goodwill acquired through the purchase of cable television systems are amortized
using the straight-line method over a period of up to 15 years. We believe these
intangible assets have indefinite lives and will not be subject to amortization
effective January 1, 2002, in connection with our adoption of SFAS No. 142,
discussed below.

The carrying value of intangible assets is reviewed if facts and circumstances
suggest that they may be impaired. If this review indicates that the carrying
value of the intangible assets will not be recovered from our undiscounted
future cash flows, an impairment loss would be recognized for the amount that
the asset's carrying value exceeds its fair value. We believe that no impairment
of intangible assets existed as of December 31, 2001 or 2000.

Deferred Financing Costs

Deferred financing costs relate to costs, primarily legal and bank facility
fees, incurred in negotiating and securing bank loans and other sources of
financing. These costs are amortized over the life of the applicable debt.

Comprehensive Loss

We own common stock and debt securities that are classified as
available-for-sale and reported at market value, with net unrealized gains and
losses recorded as components of comprehensive loss. Additionally, we record the
effective portion of certain derivatives' net unrealized gains and losses as
components of comprehensive loss. Comprehensive loss is presented in the
accompanying consolidated statements of changes in partners'
deficit/stockholders' equity. The cumulative amount of comprehensive loss is
presented in the accompanying consolidated balance sheets as accumulated other
comprehensive loss.

                                      F-8

<PAGE>

2. Significant Accounting Policies (continued)

Loss Per Share

As a result of our IPO in 1999, loss per share is presented in the accompanying
statements of operations for the year ended December 31, 1999 as if a conversion
of securities from partnership units to common shares occurred at January 1,
1999. Basic and diluted loss per share is computed using average shares
outstanding during the period that includes the effect of the new shares issued
in connection with our IPO.

Basic loss per share is computed using average shares outstanding during the
period. Diluted loss per share is equal to basic loss per share as we had
generated net losses for the years ended December 31, 2001, 2000 and 1999,
thereby making the potential effects of dilutive securities anti-dilutive.
Securities that could potentially dilute basic earnings per share in the future
include employee stock options (Note 11).

Income Taxes

Deferred income taxes are provided for using the liability method. Under this
approach, differences between the financial statements and tax bases of assets
and liabilities are determined annually, and deferred income tax assets and
liabilities are recorded for those differences that have future tax
consequences. Valuation allowances are established, if necessary, to reduce
deferred tax assets to an amount that will more likely than not be realized in
future periods. Income tax expense is comprised of the current tax payable or
refundable for the period plus or minus the net change in deferred tax assets
and liabilities.

During the year ended December 31, 1999 in connection with our IPO, a one time
non-recurring charge of $39.5 million was recorded for deferred taxes upon the
exchange of the limited partnership interests in Insight LP for our common stock
(Note 9).

Marketing and Promotional

Marketing and promotional costs are expensed as incurred. Marketing and
promotional expenses for the years ended December 31, 2001, 2000 and 1999 were
$17.4 million, $13.8 million and $5.5 million.

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations," which is effective for fiscal years beginning
after December 15, 2001 and requires the purchase method of accounting for
business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method.

                                      F-9

<PAGE>

2. Significant Accounting Policies (continued)

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which is effective for fiscal years beginning after December 15, 2001
and changes the accounting for goodwill from an amortization method to an
impairment only approach. In addition, the standard includes provisions, upon
adoption, for the reclassification of certain existing recognized intangibles as
goodwill, reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the testing for impairment of existing goodwill and other intangibles. For
existing goodwill and other intangibles, we will adopt this pronouncement on
January 1, 2002. As a result of this adoption, $2.36 billion of goodwill, which
was to be amortized ratably through 2016, will cease. We adopted the
non-amortization provision for goodwill contained within this pronouncement as
of January 1, 2002. Application of the non-amortization provisions of SFAS No.
142 would have resulted in a decrease in net loss of $61.4 million ($1.02 per
share) for the year ended December 31, 2001.

SFAS No. 142 requires that goodwill be tested annually for impairment using a
two-step process. The first step is to identify a potential impairment and, in
transition, this step must be measured as of the beginning of the fiscal year.
However, we have six months from the date of adoption to complete the first
step. The second step of the goodwill impairment test measures the amount of the
impairment loss, measured as of the beginning of the year of adoption, if any,
and must be completed by the end of our fiscal year. Intangible assets deemed to
have an indefinite life will be tested for impairment using a one-step process
that compares the fair value to the carrying amount of the asset as of the
beginning of the fiscal year, and pursuant to the requirements of SFAS No. 142
will be completed during the first quarter of 2002. Any loss resulting from the
first step impairment test will be reflected as a cumulative effect of a change
in accounting principle in the first quarter of 2002. We have not yet determined
what effect these impairment tests will have on our consolidated financial
position, results of operations and cash flows.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," which is effective for fiscal years beginning
after December 15, 2001. SFAS No. 144 supersedes FASB Statement No. 121,
"Accounting for the Impairment or Disposal of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," and the accounting and reporting
provisions relating to the disposal of a segment of a business of Accounting
Principles Board Opinion No. 30. We are currently assessing the impact of SFAS
No. 144 on our consolidated financial position, results of operations and cash
flows.

Reclassifications

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

                                      F-10

<PAGE>

3. Insight Midwest

In September 1999, Insight Midwest was formed to serve as the holding company
and a financing vehicle for our cable television system joint venture with an
indirect subsidiary of AT&T Broadband. As of January 1, 2001, Insight Midwest
was comprised of systems located in Indiana, Kentucky, Ohio, Illinois and
Georgia. Insight Midwest is equally owned by Insight LP and AT&T Broadband.

Indiana Systems

On October 31, 1998, Insight LP and AT&T Broadband contributed certain of their
cable television systems located in Indiana and Northern Kentucky (the "Indiana
Systems" or "Insight Indiana") to form Insight Indiana in exchange for a 50%
equity interest. The cable television systems contributed to Insight Indiana by
Insight LP included the Jasper and Evansville systems that were acquired by
Insight LP from AT&T Broadband on October 31, 1998 and the Noblesville,
Jeffersonville and Lafayette systems already owned by Insight LP (the "Insight
Contributed Systems").

On February 1, 1999, Insight LP exchanged its Oldham Kentucky cable system
("Oldham") servicing approximately 8,500 subscribers for Intermedia Partners of
Kentucky LP's Henderson, Kentucky cable system ("Henderson") servicing
approximately 10,600 subscribers. Further, on March 22, 1999, Insight LP
exchanged its Franklin, Virginia cable system ("Franklin") servicing
approximately 9,200 subscribers for Falcon Cable's Scottsburg ("Scottsburg")
Indiana system servicing approximately 4,100 subscribers. These transactions
have been accounted for by Insight LP as sales of the Franklin and Oldham
systems and purchases of the Scottsburg and Henderson systems. Accordingly, the
assets of the Scottsburg and Henderson systems have been included in the
accompanying consolidated balance sheets at their fair values ($31.3 million)
and Insight LP recognized a gain on the sale of the Franklin and Oldham systems
of $16.0 million, that represents the difference between the carrying value of
the Franklin and Oldham systems and their fair value. The Scottsburg and
Henderson Systems purchase price was allocated to the cable television assets
acquired in relation to their fair values as increases in fixed assets of $5.7
million and franchise costs of $25.6 million. Franchise costs arising from the
acquisition of the Scottsburg and Henderson systems are being amortized over a
period of 15 years.

On March 31, 1999, Insight LP acquired Americable International of Florida
Inc.'s Portland, Indiana and Fort Recovery, Ohio cable systems ("Portland")
servicing approximately 6,100 subscribers for $10.9 million. The purchase price
was allocated to the cable television assets acquired in relation to their fair
values as increases in fixed assets of $2.3 million and franchise costs of $8.6
million.

On October 1, 1999, as part of a joint venture restructuring involving the
Kentucky Systems (discussed below), Insight Indiana became a wholly owned
subsidiary of Insight Midwest. Pursuant to the terms of their respective
operating agreements, Insight Midwest and Insight Indiana will continue for a
twelve-year term through October 1, 2011, unless extended by Insight LP and AT&T
Broadband.

                                      F-11

<PAGE>

3. Insight Midwest (continued)

In connection with this joint venture restructuring, the historical carrying
values of the Indiana Systems contributed by AT&T Broadband were increased by an
amount equivalent to 50% of the difference between the fair value of such
systems and their respective carrying values ($89.1 million) as of October 31,
1998. In addition, the historical values of the Insight Contributed Systems were
increased by $44.3 million, an amount equivalent to 50% of the difference
between the fair value of such systems and their respective carrying values as
of October 31, 1998. The aggregate step-up to fair value (including the step-up
recorded in connection with the acquisition of the Jasper and Evansville
systems) was allocated to the cable television assets contributed by AT&T
Broadband in relation to their fair values as increases in fixed assets of $58.0
million and franchise costs of $181.6 million. Neither Insight LP nor AT&T
Broadband is contractually required to contribute additional capital to Insight
Midwest and, because Insight Midwest is a limited partnership, neither Insight
LP nor AT&T Broadband is liable for the obligations of Insight Indiana.

On January 11, 2001, Insight Midwest acquired Cable One, Inc.'s Greenwood
Indiana cable system serving approximately 14,800 customers for $62.0 million.
The purchase price was allocated to the cable television assets acquired in
relation to their fair values as increases in fixed assets and franchise costs.

Kentucky Systems

On October 1, 1999, Insight LP acquired a combined 50% interest in InterMedia
Capital Partners VI, LP (the "IPVI Partnership") from related parties of
Blackstone Cable Acquisition Company, LLC, InterMedia Capital Management VI, LLC
and a subsidiary and related party of AT&T Broadband, for $341.5 million
(inclusive of expenses). Insight Midwest assumed debt of $742.1 million (the
total debt of the IPVI Partnership) in connection with this transaction. The
IPVI Partnership, through several intermediary partnerships, owned and operated
cable television systems in four major markets in Kentucky: Louisville,
Lexington, Bowling Green and Covington (the "Kentucky Systems" or "Insight
Kentucky").

On October 1, 1999, concurrently with this acquisition, the Kentucky Systems
were contributed to Insight Midwest. As a result of the IPVI Partnership's
historical ownership structure, the Kentucky Systems are owned and operated by
Insight Kentucky Partners II, LP, a subsidiary partnership of Insight Midwest.
The Kentucky Systems and each of the other Kentucky partnerships also have
twelve-year terms through October 1, 2011, unless extended by Insight and AT&T
Broadband.

The assets of the Kentucky Systems have been valued based on the purchase price
and have been allocated between fixed and intangible assets based on our
evaluation of each individual operating system including such factors as the age
of the cable plant, the progress of rebuilds and franchise relations. This
resulted in a step-up in the carrying values of fixed assets of $160.3 million
and intangible assets of $272.1 million. Franchise costs arising from this
transaction are being amortized over 15 years.

                                      F-12

<PAGE>

3. Insight Midwest (continued)

Illinois Systems

Effective January 1, 2001, Insight Midwest completed a series of transactions
with Insight LP and AT&T Broadband for the acquisition of additional cable
television systems, primarily located in the state of Illinois, valued at
approximately $2.2 billion (the "AT&T transactions"), inclusive of systems
valued at approximately $775.8 million, contributed by Insight LP. The AT&T
transactions were financed through a credit facility established on January 5,
2001, the Midwest Holdings Credit Facility (Note 7). As a result of the AT&T
transactions, Insight Midwest acquired all of Insight LP's wholly owned systems
serving approximately 280,000 customers, including systems that Insight LP
purchased from the AT&T Broadband. At the same time, Insight Midwest acquired
from the AT&T Broadband systems serving approximately 250,000 customers.

In connection with the systems Insight LP purchased from the AT&T Broadband that
included approximately 105,000 customers, we recorded the purchased systems'
respective assets and liabilities, including debt incurred in connection with
the purchase, at their respective fair values. The purchase price of $393.5
million was allocated to the cable television assets acquired in relation to
their fair values as increases in fixed assets of $52.3 million and franchise
costs of $341.2 million. Franchise costs arising from this acquisition are being
amortized over a period of 15 years.

Concurrently with the completion of Insight LP's purchase of systems from AT&T
Broadband, Insight LP contributed such systems, along with all of its wholly
owned systems serving approximately 175,000 customers, to Insight Midwest. The
total value of such contributed systems was $1.2 billion. The assets and
liabilities, including debt assumed, of such contributed systems' continue to be
recorded at their respective carrying values, as these systems remain within the
consolidated group. We recorded a reduction in paid in capital of $113.8 million
equal to 50% of the carrying value of such net assets contributed to Insight
Midwest, representing the interest owned by AT&T Broadband (minority interest)
through its investment in Insight Midwest.

Concurrently, AT&T Broadband contributed directly to Insight
Midwest certain Illinois systems serving approximately 250,000 customers. The
total value of such contributed systems was $983.3 million. We recorded an
addition to paid in capital and a reduction to our minority interest liability
equal to $328.8 million, representing the value of net assets contributed
attributable to AT&T Broadband's 50% interest in Insight Midwest. Insight
Midwest recorded 100% of the assets and liabilities (including debt assumed of
$306.2 million) of such systems contributed at their respective fair values. The
fair value of $983.3 million was allocated to the cable television assets
acquired in relation to their fair values as increases in fixed assets of $116.1
million and franchise costs of $867.2 million. Franchise costs arising from this
acquisition are being amortized over a period of 15 years.

Both Insight LP and AT&T Broadband contributed their respective
systems to Insight Midwest subject to an amount of indebtedness such that
Insight Midwest remains equally owned by Insight LP and AT&T Broadband. The
total debt assumed by Insight Midwest of $654.5 million was financed with the
proceeds from the Midwest Holdings Credit Facility (Note 7).

                                      F-13

<PAGE>

3. Insight Midwest (continued)

As part of the AT&T transactions, we exchanged our Claremont, California cable
television system, serving approximately 8,400 customers, for the AT&T
Broadband's Freeport, Illinois system, serving approximately 10,000 customers,
each valued at approximately $38.0 million. This system exchange was accounted
for by Insight LP as a sale of its Claremont system and a purchase of the
Freeport system. We recorded a gain of approximately $34.2 million in connection
with this transaction.

Ohio Systems

On August 21, 1998, Insight LP and Coaxial Communications of Central Ohio, Inc.
("Coaxial") entered into a contribution agreement (the "Coaxial Contribution
Agreement") pursuant to which Coaxial contributed to Insight Ohio (a newly
formed limited liability company) substantially all of the assets and
liabilities of its cable television systems located in Columbus, Ohio and
Insight LP contributed to Insight Ohio $10.0 million in cash. As a result of the
Coaxial Contribution Agreement, Coaxial owned 25% of the non-voting common
equity and Insight LP, through its subsidiary Insight Holdings of Ohio, LLC,
owned 75% of the non-voting common equity of Insight Ohio. In addition, Coaxial
also received two separate series of voting preferred equity (Series A Preferred
Interest--$140 million and Series B Preferred Interest--$30 million) of Insight
Ohio (collectively the "Voting Preferred Interests").

The Voting Preferred Interests provides for cash distributions to Coaxial and
certain of its affiliates as follows; Series A--10% and Series B--12 7/8%.
Insight Ohio cannot redeem the Voting Preferred Interests without the permission
of Coaxial; however, Insight Ohio will be required to redeem the Series A
Preferred Interests in August 2006 and the Series B Preferred Interest in August
2008. Coaxial has pledged the Series A Preferred Interest as security for $140.0
million of 10% Senior Notes due in 2006 issued by Coaxial and its affiliate
("Senior Notes"). Coaxial's majority shareholder has pledged Coaxial's stock as
security for $55.9 million of aggregate principal amount at maturity of 12 7/8%
Senior Discount Notes due in 2008 issued by Coaxial's majority shareholder and
its affiliate ("Senior Discount Notes"). The Senior Notes and Senior Discount
Notes are conditionally guaranteed by Insight Ohio.

On August 8, 2000, Insight Ohio purchased Coaxial's 25% non-voting common equity
interest. The purchase price was 800,000 shares of our common stock and cash in
the amount of $2.6 million. In connection with the purchase, Insight Ohio's
operating agreement was amended to, among other things, remove certain
participating rights of the principals of Coaxial and certain of its affiliates
(the "Coaxial Entities"). Additionally, the agreement was amended to incorporate
70% of Insight Ohio's total voting power into the common equity interests of
Insight Ohio and 30% of Insight Ohio's total voting power into the Preferred
Interests of Insight Ohio.

                                      F-14

<PAGE>

3. Insight Midwest (continued)

As a result of this transaction, the financial results of Insight Ohio have been
consolidated with our financial results effective January 1, 2000, with minority
interest recorded for the 25% common interest owned by Coaxial through August 8,
2000. In connection with this transaction, Insight LP recorded a step-up in fair
value of Insight Ohio's assets of $229.2 million, which represents the
difference between the purchase price and its equity in Insight Ohio's net
assets in excess of Insight Ohio's net assets. This amount has been allocated to
franchise costs and goodwill and is being amortized over a period of 12 years.

Although the financial results of Insight Ohio for 2000 have been consolidated
as a result of this transaction, for financing purposes, Insight Ohio is an
unrestricted subsidiary of ours and is prohibited by the terms of its
indebtedness from making distributions to us. Insight Ohio's conditional
guarantee of the Senior Notes and the Senior Discount Notes remains in place.

If at any time the Senior Notes or Senior Discount Notes are repaid or
significantly modified, or in any case after August 15, 2008, the principals of
the Coaxial Entities may require us to purchase their interests in the Coaxial
Entities for a purchase price equal to the difference, if any, of $32.6 million
less the then market value of the 800,000 shares of our common stock issued on
August 8, 2000. The fair value of such contingent consideration was $7.1
million.

Although Insight LP manages and controls the day-to-day operations of Insight
Ohio, up until August 8, 2000, the shareholders of Coaxial had significant
participating rights, including voting power. Consequently, through December 31,
1999, Insight LP accounted for its investment in Insight Ohio under the equity
method. In addition, Insight LP amortized the difference between its initial
$10.0 million investment and its 75% interest in Insight Ohio's deficiency in
assets.

Accordingly, the accompanying statement of operations for the year ended
December 31, 1999 include Insight LP's share of Insight Ohio's net loss and the
aforementioned amortization of deficiency in assets of $4.6 million and $8.6
million.

                                      F-15

<PAGE>

4. Pro Forma Results of Operations

Our unaudited pro forma results of operations for the years ended December 31,
2001 and 2000, assuming the acquisition of the Illinois systems and the
Greenwood, Indiana system occurred as of January 1, 2000 and excluding the
effect of the gain on cable system exchange (Note 3) recorded in the year ended
December 31, 2001 were as follows (in thousands, except per share amounts):

                                                        Year Ended December 31,
                                                          2001         2000
                                                        ---------    ---------
     Revenue                                            $ 704,587    $ 667,415
     Loss before extraordinary item and accrual of
         preferred interests                              (89,254)     (73,827)
     Net loss attributable to common stockholders        (114,772)     (92,552)
     Basic and diluted loss per share attributable
         to common stockholders                             (1.91)       (1.55)


Our unaudited pro forma results of operations for the year ended December 31,
2000 and 1999, assuming the acquisitions of the Kentucky and Ohio systems and
each of the other 1999 acquisitions and exchanges described in Note 3 occurred
as of January 1, 1999 were as follows (in thousands, except per share data):

                                                        Year Ended December 31,
                                                          2000         1999
                                                        ---------    ---------
     Revenue                                            $ 476,186    $ 448,322
     Loss before extraordinary item and accrual of
         preferred interests                              (42,987)    (107,552)
     Net loss attributable to common stockholders         (61,712)    (126,277)
     Basic and diluted loss per share attributable
         to common stockholders                             (1.03)       (3.49)

5. Investments

SourceSuite and Liberate

Effective November 17, 1999, Insight Interactive entered into a Contribution
Agreement with Source Media, Inc. ("Source Media"), providing for the creation
of a joint venture, SourceSuite LLC ("SourceSuite"). Under the terms of the
Contribution Agreement, Source Media contributed its Virtual Modem 2.5 software
and the Interactive Channel products and services, including SourceGuide and
LocalSource television content. We contributed $13.0 million in equity financing
for 50% of the equity in the joint venture.

                                      F-16

<PAGE>

5. Investments (continued)

On March 3, 2000, pursuant to a merger of the joint venture with a subsidiary of
Liberate Technologies ("Liberate"), SourceSuite sold all of its VirtualModem
assets in exchange for the issuance to each of Insight Interactive and Source
Media of 886,000 shares of Liberate common stock.

SourceSuite continues to own and operate its programming assets, LocalSource and
SourceGuide, and has preferred content and programming services agreements with
Liberate. As a result of this transaction, we recorded a gain on sale of joint
venture assets of $80.9 million in the year ended December 31, 2000. In
addition, on December 31, 2000, we recorded an impairment write-down of $74.1
million to reflect an other-than-temporary decline in the value of our
investment in Liberate. This impairment write-down was calculated as the
difference between the fair value of the Liberate shares as of December 31, 2000
as compared to March 3, 2000, the date we received the shares. As of December
31, 2001, the carrying amount of our investment in Liberate was $10.2 million,
net of unrealized losses of $3.1 million.

In connection with the Contribution Agreement, on November 17, 1999, we
purchased 842,105 shares of Source Media common stock at $14.25 per share,
representing approximately 6% of Source Media's outstanding stock, for a
purchase price of $12.0 million in cash.

We have accounted for our investment in SourceSuite under the equity method of
accounting. Accordingly, the accompanying statements of operations for the years
ended December 31, 2001 and 2000 include losses of $2.0 million and $3.8 million
that represents our 50% share of SourceSuite's net loss. As of December 31,
2001, through equity method accounting, our investment in SourceSuite has a
carrying value of $741,000.

On December 31, 2000, we recorded an impairment write-down of $11.2 million to
reflect an other-than-temporary decline in the value of our investment in Source
Media. This impairment write-down was calculated as the difference between the
fair value of the Source Media shares on December 31, 2000 as compared to
November 17, 1999, the date we purchased the shares. Fair value was determined
using the quoted market price of the stock. During the year ended December 31,
2001, we wrote-off our remaining investment in Source Media of $842,000. Source
Media has announced that it has terminated operations effective March 14, 2002.

In addition, in October 1999, we purchased $10.2 million face amount of Source
Media's 12% bonds, maturing November 1, 2004, for approximately $4.1 million.
The bond discount of $6.1 million was being amortized to interest income over
the life of the bonds. As of December 31, 2000, we recorded an impairment
write-down of $3.3 million to reflect other-than-temporary declines in the value
of our investment in Source Media bonds. Additionally, as of December 31, 2000,
we ceased amortization of the bond discount.

During the year ended December 31, 2001, we recorded an additional impairment
write-down of $1.4 million to reflect an other-than-temporary decline in the
value of such bonds. These impairment write-downs were calculated as the
difference between the amortized cost of the bonds and their fair value as

                                      F-17

<PAGE>

5. Investments (continued)

of the date of write-down. Fair value was determined using the quoted market
price of the bonds. As of December 31, 2001, the carrying value of these bonds
was $410,000.

On March 14, 2002, we purchased the remaining 50% equity interest in SourceSuite
owned by Source Media by tendering our SourceMedia 12% bonds.

Commerce.TV

Commerce.TV Corporation ("Commerce.TV") is a privately owned company that owns
proprietary software and a database network that enables cable television
customers to purchase products from third party merchants and track the status
of their orders using a set-top box remote control.

In April 2000, we purchased 2.5 million shares of Commerce.TV's Series B
redeemable, convertible preferred stock for $5.0 million, which were accounted
for under the cost method. This preferred stock had a liquidation preference
equal to $5.0 million.

In June 2001, we exchanged our Series B preferred stock and related warrants for
shares of Series D convertible preferred stock with a liquidation preference of
$4.8 million. In addition, we purchased $2.6 million principal amount of
convertible secured notes due February 28, 2002. Additionally, during 2001, we
began providing Commerce.TV's service to our customers in Lexington, Kentucky on
a trial basis.

In February 2002, Commerce.TV's secured creditors, including us, declared the
full amount of its $12.0 million notes immediately due and payable and have
conducted a public sale of its assets through an auction, which remained open
for bids through February 28, 2002. Based on the circumstances surrounding this
foreclosure, as of December 31, 2001, we have written-off our investment in
Commerce.TV of $7.6 million.

AgileTV

AgileTV Corporation ("Agile TV") is a privately owned company developing a
speech recognition system that enables cable television customers to operate
their digital set-top boxes using voice recognition technology.

In November 2001, we purchased 3.0 million shares of AgileTV's Series C
redeemable, convertible preferred stock for $7.5 million, which we are
accounting for under the cost method. This preferred stock has a liquidation
preference equal to $7.5 million. In connection with this investment, we
received 3 million warrants to purchase AgileTV common stock with an exercise
price of $2.50 per share and an additional 800,000 warrants with an exercise
price of $1.25 per share.

                                      F-18

<PAGE>

6. Long-Lived Assets

Fixed assets consisted of:

                                                      December 31,  December 31,
                                                         2001          2000
                                                     ---------------------------
                                                           (in thousands)

     Land, buildings and improvements                $    36,501    $    23,436
     Cable system equipment                            1,573,733      1,082,194
     Furniture, fixtures and office equipment             16,019          9,646
                                                     ---------------------------
                                                       1,626,253      1,115,276
     Less accumulated depreciation and amortization     (474,544)      (294,388)
                                                     ---------------------------
        Total fixed assets, net                      $ 1,151,709    $   820,888
                                                     ===========================

Intangible assets consisted of:

                                                      December 31,  December 31,
                                                         2001          2000
                                                     ---------------------------
                                                           (in thousands)

     Franchise costs                                 $ 2,690,889    $ 1,396,416
     Goodwill                                             84,119         71,267
                                                     ---------------------------
                                                       2,775,008      1,467,683
     Less accumulated amortization                      (377,955)      (197,051)
                                                     ---------------------------
        Total intangible assets, net                 $ 2,397,053    $ 1,270,632
                                                     ===========================

                                      F-19

<PAGE>

7. Debt

Debt consisted of:

                                                   December 31,   December 31,
                                                      2001           2000
                                                  ----------------------------
                                                        (in thousands)

     Insight Ohio Credit Facility                 $    25,000    $    25,000
     Insight Indiana Credit Facility                        -        298,600
     Insight Kentucky Credit Facility                       -        356,300
     Insight Midwest Holdings Credit Facility       1,580,000              -
     Insight Midwest 9 3/4% Senior Notes              200,000        200,000
     Insight Midwest 10 1/2% Senior Notes             500,000        500,000
     Insight Inc. 12 1/4% Senior Discount Notes       400,000              -
                                                  ----------------------------
                                                    2,705,000      1,379,900
     Less unamortized discount on notes              (162,524)        (7,377)
                                                  ----------------------------
        Total debt                                $ 2,542,476    $ 1,372,523
                                                  ============================

Insight Ohio Credit Facility

Insight Ohio's credit facility (the "Insight Ohio Credit Facility") provides for
revolving credit loans of up to $25.0 million. The Insight Ohio Credit Facility
has a six-year maturity from the date of borrowings, with reductions to the
amount of the commitment commencing after three years. Our obligations under the
Insight Ohio Credit Facility are secured by substantially all the assets of
Insight Ohio. The Insight Ohio Credit Facility requires Insight Ohio to meet
certain financial and other debt covenants. Loans under the Insight Ohio Credit
Facility bear interest, at our option, at the prime rate or at a Eurodollar
rate. In addition to the index rates, we pay an additional margin percentage
tied to Insight Ohio's ratio of total debt to adjusted annualized operating cash
flow. The weighted average interest rates in effect as of December 31, 2001 and
2000 were 4.3% and 8.8%.

Insight Midwest Holdings Credit Facility

On January 5, 2001, through a wholly owned subsidiary of Insight Midwest
("Insight Midwest Holdings") which holds all of our cable television systems
other than the Ohio System, we entered into a credit facility (the "Midwest
Holdings Credit Facility") to finance the AT&T transactions and to repay the
outstanding indebtedness under the Indiana and Kentucky Credit Facilities. The
Midwest Holdings Credit Facility expires in 2009 and provides for maximum
borrowings of $1.75 billion. Obligations under this credit facility are secured
by a pledge of the outstanding equity interests of Insight Midwest Holdings and
its subsidiaries.

The Midwest Holdings Credit Facility requires Insight Midwest Holdings to meet
certain financial and other debt covenants. Borrowings under this credit
facility bear interest, based on our election, of an Alternative Base Rate
(equal to the greater of the Prime Rate or the Federal Funds Effective Rate plus

                                      F-20

<PAGE>

7. Debt (continued)

0.5%) or Adjusted LIBOR (equal to LIBOR multiplied by the Statutory Reserve
Rate) plus an additional margin yield tied to Insight Midwest Holdings' leverage
ratio of between 0.5% and 2.75%. As of December 31, 2001, the weighted average
interest rate on this credit facility was 5.1%.

As a result of the repayment of the Indiana and Kentucky Credit Facilities on
January 5, 2001, we recorded an extraordinary charge of $6.1 million (net of
income tax of $4.2 million) related to the write-off of unamortized deferred
financing costs related to these credit facilities.

Insight Midwest Senior Notes

On October 1, 1999 simultaneously with the closing of the purchase of Insight
Kentucky, Insight Midwest completed a $200.0 million offering of 9 3/4% senior
notes due in October 2009. The proceeds of the offering were used to repay
certain debt of the IPVI Partnership. Interest payments on these Senior Notes,
which commenced on April 1, 2000, are payable semi-annually on April 1 and
October 1.

On November 6, 2000, Insight Midwest completed a $500.0 million offering of 10
1/2% senior notes due in November 2010. Insight Midwest received proceeds of
$487.5 million, net of an underwriting fee of $5.0 million and a bond discount
of $7.5 million that is being amortized through November 2010. The proceeds of
the offering were used to repay a portion of the outstanding debt under the
Insight Indiana Credit Facility and Insight Kentucky Credit Facility. Interest
payments on these Senior Notes, which commenced on May 1, 2001, are payable
semi-annually on May 1 and November 1.

The Insight Midwest 9 3/4% and 10 1/2% Senior Notes are redeemable on or after
October 1, 2004 and November 1, 2005. In addition, Insight Midwest can redeem up
to 35% of the Insight Midwest 9 3/4% and 10 1/2% Senior Notes prior to October
1, 2002 and November 1, 2005, with the net proceeds from certain sales of
Insight Midwest's equity. Each holder of the Insight Midwest Senior Notes may
require Insight Midwest to redeem all or part of that holder's notes upon
certain changes of control. The Insight Midwest Senior Notes are general
unsecured obligations and are subordinate to all other liabilities of Insight
Midwest, the amounts of which were $2.05 billion and $770.5 million as of
December 31, 2001 and 2000. The Insight Midwest Senior Notes contain certain
financial and other debt covenants.

In May 2000 and September 2001, Insight Midwest and Insight Capital, Inc.
completed exchange offers pursuant to which the 9 3/4% Senior Notes and 10 1/2%
Senior Notes were exchanged for identical notes registered under the Securities
Act of 1933.

Insight Inc. 12 1/4% Senior Discount Notes

On February 6, 2001, we completed a $400.0 million offering of 12 1/4% Senior
Discount Notes due in February 2011. These notes were issued at a discount to
their principal amount at maturity resulting in gross proceeds to us of $220.1
million. We utilized $20.2 million of the proceeds to repay an outstanding
inter-company loan from Insight Midwest, which we incurred in connection with
the AT&T transactions.

                                      F-21

<PAGE>

7. Debt (continued)

No cash interest on the discount notes will accrue prior to February 15, 2006.
Thereafter, cash interest on the discount notes will accrue and be payable on
February 15 and August 15 of each year, commencing August 15, 2006. The initial
accreted value of the discount notes of $220.1 million will increase until
February 15, 2006 such that the accreted value will equal the principal amount
of $400.0 million on February 15, 2006.

In September 2001, we completed an exchange offer pursuant to which the 12 1/4%
Senior Discount Notes, issued in February 2001, were exchanged for identical
notes registered under the Securities Act of 1933.

Debt Principal Payments

As of December 31, 2001, annual principal payments required on our debt were as
follows (in thousands):

          2002                   $          -
          2003                          5,000
          2004                         80,000
          2005                         81,250
          2006                        106,750
          Thereafter                2,432,000
                                 ------------
                 Total           $  2,705,000
                                 ============

Interest Rate Swap and Collar Agreements

We enter into interest-rate swap agreements to modify the interest
characteristics of our outstanding debt from a floating rate to a fixed rate
basis. These agreements involve the payment of fixed rate amounts in exchange
for floating rate interest receipts over the life of the agreement without an
exchange of the underlying principal amount. The differential to be paid or
received is accrued as interest rates change and is recognized as an adjustment
to interest expense related to the debt. The related amount payable or
receivable is included in other liabilities or assets.

As of December 31, 2001 and 2000, we had entered into various interest rate swap
and collar agreements effectively fixing interest rates between 4.7% and 6.3%,
plus the applicable margin, on $500.0 million and $701.0 million notional value
of debt. The agreements outstanding as of December 31, 2001, expire between
February 2002 and July 2003. As of December 31, 2001, we had $1.8 million of
accrued interest related to these agreements.

In June 1999, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133, as amended by SFAS No. 137
and No. 138, became effective for us beginning January 1, 2001. SFAS No. 133
establishes accounting and

                                      F-22

<PAGE>

7. Debt (continued)

reporting standards for derivative instruments embedded in other contracts and
for hedging activities. SFAS No. 133 requires us to recognize all derivatives on
the balance sheet at fair value.

On January 1, 2001, our derivative financial instruments, which were obtained to
manage our exposure to interest rate risk, included interest rate swap and
collar agreements, which qualified as cash flow hedges. On January 1, 2001, we
recorded as a component of other comprehensive loss a $1.1 million transition
adjustment loss (net of $776,000 tax benefit) representing the cumulative effect
of adopting SFAS No. 133. Changes in the fair value of such cash flow hedges are
recognized in stockholders' equity as a component of comprehensive loss. For the
year ended December 31, 2001, the decrease in the fair value was $12.3 million
(net of $8.6 million tax benefit).

8. Supplemental Cash Flow Information

The following amounts were paid in cash during the years ended December 31:

                                      2001             2000             1999
                                    --------------------------------------------
                                                  (in thousands)

     Interest                       $ 196,747        $ 117,100        $  45,299
     Income taxes                         538              657              104

During the year ended December 31, 2001, we entered into an investing activity
in which our joint venture partner contributed cable systems to Insight Midwest
valued at $983.3 million resulting in a non-cash increase in long-lived assets,
debt, other liabilities, minority interest and additional paid-in-capital.

During the year ended December 31, 2000, we entered into an investing activity
in which we issued common stock valued at $17.5 million in connection with an
acquisition of a cable system resulting in a non-cash increase in long-lived
assets, debt and additional paid-in-capital.

9. Capital Stock

Our authorized capitalization consists of 300,000,000 shares of Class A common
stock, par value $.01 per share, 100,000,000 shares of Class B common stock, par
value $.01 per share and 100,000,000 shares of preferred stock, par value $.01
per share. The rights of the holders of Class A and Class B common stock are
substantially identical in all respects, except for voting rights. Holders of
Class A common stock are entitled to one vote per share and holders of Class B
common stock are entitled to ten votes per share.

                                      F-23

<PAGE>

10. Income Taxes

We were originally organized as a Delaware limited partnership that elected to
be treated as a "flow-through" entity for federal income tax purposes. Since we
were not subject to federal and state income taxes for the period through July
26, 1999, the date of our IPO, no income tax provision was recorded. Instead,
each of the individual partners included our taxable income or loss in their
respective income tax returns.

Effective July 26, 1999, we converted to a corporation subject to federal, state
and local income taxes. In connection with our IPO, we recorded a one time
non-recurring charge of $39.5 million for deferred taxes upon the exchange of
the limited partnership interests in Insight LP for our stock. Such charge
relates to the deferred tax liability associated with the difference between the
financial statements and tax basis of our assets and liabilities. For the years
ended December 31, 2001, 2000 and 1999, we recorded a deferred tax benefit of
$47.1 million, $34.3 million and $8.2 million (relating to losses from
operations subsequent to the conversion). In addition, for the tax years ended
December 31, 2001, 2000 and 1999, we recorded a current tax expense related to
current and local taxes of $500,000, $500,000 and $300,000, respectively.

Deferred income taxes represent the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes. Significant components of our
deferred tax assets and liabilities consisted of the following:

                                                              December 31,
                                                           2001          2000
                                                        ------------------------
                                                             (in thousands)
     Deferred tax assets:
          Net operating loss carry-forward              $ 147,587    $  51,348
          Accounts receivable                                 243          252
          Investment in unconsolidated affiliates           2,787        1,954
          Unrealized loss on investments                    8,458        3,120
          Deferred interest expense                         9,523            -
          Interest hedges                                   9,330            -
          Accrued expenses and other liabilities               18           70
                                                        ------------------------
     Gross deferred tax asset                             177,946       56,744
     Valuation allowance                                  (12,631)      (3,120)
                                                        ------------------------
     Net deferred tax asset                               165,315       53,624

     Deferred tax liabilities:
          Depreciation & amortization                     165,315      114,448
                                                        ------------------------
     Gross deferred tax liability                         165,315      114,448
                                                        ------------------------
     Net deferred tax liability                         $       -    $ (60,824)
                                                        ========================

                                      F-24

<PAGE>

10. Income Taxes (continued)

We have provided a full valuation allowance on our deferred tax asset,
consisting primarily of net operating loss carryforwards and unrealized losses
on investments, due to the uncertainty regarding our realization of such assets
in the future. The increase in the valuation allowance on the deferred tax asset
for the year ended December 31, 2001 was $9.5 million.

The reconciliation of income tax expense computed at the U.S. federal statutory
rate to income tax expense for the years ended December 31, 2001, 2000 and 1999
were as follows:

<TABLE>
<CAPTION>
                                                                       Year ended December 31,
                                                                    2001         2000        1999
                                                                 ----------------------------------
                                                                           (in thousands)
     <S>                                                         <C>          <C>         <C>
     Benefit at federal statutory rate                           $ (39,209)   $ (26,116)  $ (17,756)
     State and local taxes, net                                     (8,283)      (5,258)     (1,141)
     Expenses not deductible for U.S. tax purposes                     335           70         196
     Non-deductible amortization                                     1,859          726           -
     Preferred interest accrual                                     (6,607)      (6,367)          -
     Disallowed interest expense                                       581            -           -
     Disallowed compensation deduction                                 647            -           -
     Increase in valuation allowance                                 4,059        3,120           -
     Adjustment to record charge upon conversion from a
       partnership to a corporation                                      -            -      39,526
     Loss for which no expense/benefit has been provided                 -            -      10,761
                                                                 ---------    ---------   ---------
     Income tax (benefit) expense                                $ (46,618)   $ (33,825)  $  31,586
                                                                 =========    =========   =========
</TABLE>

As of December 31, 2001, we had a net operating loss carry-forward of $360.0
million for U.S. federal income tax purposes. Our net operating loss began
accumulating effective July 26, 1999, the date of our IPO. The net operating
loss will expire in the years 2019 through 2021.

11. Stock Option Plan and Other Stock Based Compensation

Stock Option Plan

We adopted a stock option plan (the "Plan") on June 24, 1999, which provides for
the grant of incentive stock options ("ISOs"), nonqualified stock options and
stock appreciation rights ("SARs"). We have reserved 5,000,000 shares of common
stock for grant under the Plan. ISOs may be granted only to our officers and key
employees and nonqualified stock options and SARs may be granted to our
officers, employees, directors, agents and consultants. The Plan provides for
the granting of ISOs at an exercise price that is not less than the fair market
value of the stock on the date of grant and the granting of nonqualified options
and SARs with any exercise price.

                                      F-25

<PAGE>

11. Stock Option Plan and Other Stock Based Compensation (continued)

Employee stock options vest over five years and expire ten years from the date
granted. The following summarizes stock option activity for the years ended
December 31, 2001, 2000 and 1999:

                                                                Weighted Average
                                                 Options         Exercise Price
                                               -------------    ----------------
      Outstanding as of January 1, 1999                   -                 -
      Granted                                     2,898,400       $     24.60
      Exercised                                           -                 -
      Canceled/forfeited                            (15,000)            24.50
                                               -------------    ----------------
      Outstanding as of December 31, 1999         2,883,400             24.60
      Granted                                       263,000             15.72
      Exercised                                           -                 -
      Canceled/forfeited                           (130,500)            23.93
                                               -------------    ----------------
      Outstanding as of December 31, 2000         3,015,900             23.86
      Granted                                     1,282,840             19.81
      Exercised                                     (14,500)            16.45
      Canceled/forfeited                           (126,500)            18.76
                                               -------------    ----------------
      Outstanding as of December 31, 2001         4,157,740       $     22.79
                                               =============    ================

The weighted average fair value of options granted in 2001, 2000 and 1999 was
$11.30, $9.43 and $13.39 per share. As of December 31, 2001, 2000 and 1999,
1,158,032, 577,300 and 8,400 of the outstanding options were exercisable with
weighted average exercise prices of $24.28, $24.38 and $25.75. The following
summarizes details of outstanding stock options as of December 31, 2001:

                                                           Weighted Average
                      Number of                               Remaining
    Range of           Options       Weighted Average      Contractual Life
 Exercise Prices     Outstanding      Exercise Price          (in years)
-----------------   -------------    ----------------     ------------------
$13.25 - $19.86        1,085,682          $17.80                 9.7
$20.38 - $30.13        3,072,058          $24.55                 7.7
                    -------------    ----------------     ------------------
                       4,157,740          $22.79                 8.2
                    =============    ================     ==================

Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation", we have
elected to account for employee stock-based compensation under APB Opinion No.
25, "Accounting for Stock Issued to Employees," using an intrinsic value
approach to measure compensation expense. Accordingly, no compensation expense
has been recognized for options granted under the Plan since all options were
granted to employees at exercise prices equal to or greater than fair market
value on the date of grant.

                                      F-26

<PAGE>

11. Stock Option Plan and Other Stock Based Compensation (continued)

Had compensation cost for the Plan been determined based on the fair value at
the grant date consistent with SFAS No. 123, our net loss applicable to common
stockholders and net loss per share (using the following assumptions) for the
years ended December 31, 2001, 2000 and 1999 would have been:

<TABLE>
<CAPTION>
               Net Loss
            Applicable to     Net Loss   Weighted-Average       Stock                  Expected
               Common           Per          Risk-Free          Price      Dividend     Option
  Year      Stockholders       Share      Interest Rate       Volatility    Yield        Life
--------   --------------    ---------   ----------------    -----------   --------    --------
<S>        <C>               <C>         <C>                 <C>           <C>         <C>
  2001     $102.8 million      $1.71           4.50%              50%         0%        7 years
  2000       63.1 million       1.06           6.25%              50%         0%        7 years
  1999       86.2 million       2.63           6.50%              42%         0%        7 years
</TABLE>

Other Stock Based Compensation

In connection with our IPO, we issued a total of 1,412,181 shares of common
stock to our employees. We recorded non-cash compensation expense of $19.3
million in connection with the issuance of these shares. In October 1999 and
April 2000, we granted loans to certain of these employees, the proceeds of
which were used to satisfy the individual income tax withholding obligations
with respect to the receipt of these shares. In the aggregate, these loans total
$14.0 million and are included in other non-current assets. The loans are
non-recourse and are represented by notes that are secured by common stock
pledges equal to the number of shares each individual received as compensation.

Through April 1, 2001, the notes charged interest at a rate of 6% per annum.
Subsequent to April 1, 2001, the rate of interest was adjusted to 5% per annum.
The notes are payable on October 1, 2004, or 180 days following the termination
of employment, provided that the proceeds of any sales of the pledged shares
must be applied towards early repayment of these loans unless the value of the
remaining shares exceeds 200% of the remaining loan amount.

Accrued interest on these loans since October 1999 continues to be fully
reserved as a result of a loan interest forgiveness provision approved by the
board of directors, which enables us to forgive payment of accrued interest on
the loans to employees in good standing. On October 1, 2001, the first interest
forgiveness initiative under this provision became effective; all accrued
interest from October 1, 1999 through September 30, 2001 was forgiven.
Additionally, all income taxes related to such interest forgiveness were paid by
us on behalf of the affected employees. Forgiven interest through September 30,
2001 amounted to $1.6 million. Income tax liabilities resulting from such
forgiven interest through September 30, 2001 amounted to $1.7 million, which is
included in our 2001 statement of operations as compensation expense.

                                      F-27

<PAGE>

12. Financial Instruments

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit
risk consist principally of cash and cash equivalents and accounts receivable.
We maintain cash and cash equivalents with various financial institutions. These
financial institutions are located throughout the country and our policy is
designed to limit exposure to any one institution. Concentrations of credit risk
with respect to accounts receivable are limited due to the large number of
customers comprising our customer base.

Fair Value

We used the following methods and assumptions in estimating our fair value
disclosures for financial instruments:

Cash equivalents and accounts receivable: The carrying amount reported in the
balance sheet for cash equivalents and accounts receivable approximates fair
value.

Debt: The carrying amounts of our borrowings under our credit arrangements
approximate fair value as they bear interest at floating rates. The fair value
of Insight Midwest's 9 3/4% and 10 1/2% Senior Notes as of December 31, 2001 and
2000 was $210.0 million and $540.0 million and $198.5 million and $515.0
million. The fair value of Insight Inc. 12 1/4% Senior Discount Notes was $234.0
million as of December 31, 2001.

Interest rate swap agreements: As of January 1, 2001, interest rate swap
agreements are recorded in our financial statements at fair value. Prior to
January 1, 2001, interest rate swap agreements were not recorded in our
financial statements. The fair value (cost) of such swap agreements was $(22.8)
million and $(1.9) million as of December 31, 2001 and 2000.

13. Related Party Transactions

Managed Systems

On March 17, 2000, we entered into a two-year management agreement with
InterMedia Partners Southeast, an affiliate of AT&T Broadband, to provide
management services to cable television systems acquired by AT&T Broadband. As
of December 31, 2001, these systems served approximately 117,200 customers in
the states of Indiana and Kentucky. Through March 31, 2001, we earned a monthly
fee of 3% of gross revenues for providing such management services. In March
2002, the management agreement was amended to expire on June 30, 2002 and
provide for a monthly fee of 5% of gross revenues retroactive to April 1, 2001.
For the years ended December 31, 2001 and 2000, we recognized $2.4 million and
$1.2 million of management fees in connection with this agreement.

                                      F-28

<PAGE>

13. Related Party Transactions (continued)

Programming

We purchase substantially all of our pay television and other programming from
affiliates of AT&T Broadband. Charges for such programming were $116.0 million,
$57.4 million and $29.6 million for the years ended December 31, 2001, 2000 and
1999. As of December 31, 2001 and 2000, $10.3 million and $9.8 million of
accrued programming costs were due to affiliates of AT&T Broadband. We believe
that the programming rates charged by the affiliates of AT&T Broadband are lower
than those available from independent parties.

Telephony Agreements

In July 2000, to facilitate delivery of telephone services, we entered into a
ten-year agreement with AT&T Broadband that allows Insight Midwest to deliver to
our customer's local telephone service under the AT&T Digital Phone brand. Under
the terms of the agreement, Insight Midwest leases for a fee certain capacity on
our network to AT&T Broadband. Insight Midwest provides certain services and
support for which it receives additional payments. We began providing telephony
services to a limited number of our customers in 2001. For the year ended
December 31, 2001, revenue related to telephony services was $170,000. The
capital required to deploy telephone services over our networks is shared, with
AT&T Broadband responsible for switching and transport facilities. AT&T also
pays us for installations, marketing and billing support that amounted to $1.4
million for the year ended December 31, 2001.

Advertising Services

In October 1999, to facilitate the administration of our advertising services in
our Kentucky Systems, we entered into an agreement expiring on January 1, 2004
with TCI Media Services LLC ("TCI Media Services"), a subsidiary of AT&T Corp.,
which provides for TCI Media Services to perform all of our Kentucky advertising
sale and related administrative services. For the years ended December 31, 2001,
2000 and 1999, we received advertising revenues from TCI Media Services derived
from our Kentucky Systems of $12.4 million, $12.8 million and $3.2 million. As
of December 31, 2001 and 2000, we had $6.9 million and $6.8 million recorded as
a receivable due from TCI Media Services included in prepaid and other current
assets. We pay TCI Media Services a fixed and variable fee based on advertising
sales cash flow growth for providing this service. As of December 31, 2001 and
2000, we had $666,000 and $435,000 recorded as payables to TCI Media Services
related to such services.

SourceSuite

We are currently providing SourceSuite's interactive services to customers in
some of our systems. For the year ended December 31, 2001 and 2000, fees for
such services totaled $1.2 million and $77,000.

                                      F-29

<PAGE>

14. 401(k) Plan

We sponsor a savings and investment 401(k) Plan (the "Plan") for the benefit of
our employees. All employees who have completed six months of employment and
have attained age 18 are eligible to participate in the Plan. We make matching
contributions equal to 100% of the employee's contribution excluding any such
contributions in excess of 5% of the employee's wages. Effective April 1, 2001,
50% of our matching contribution to the Plan is in the form of our common stock.
During 2001, 2000 and 1999, we matched contributions of $2.3 million, $957,000
and $562,000.

15. Commitments and Contingencies

Programming Contracts

We enter into long-term contracts with third parties who provide us with
programming for distribution over our cable television systems. These
programming contracts are a significant part of our business and represent a
substantial portion of our operating costs. Since future fees under such
contracts are based on numerous variables, including number and type of
customers, we have not recorded any liabilities with respect to such contracts.

Lease Agreements

We lease and sublease equipment and office space under various operating and
capital lease arrangements expiring through December 31, 2015. Future minimum
rental payments required under such operating and capital leases as of December
31, 2001 were as follows:

<TABLE>
<CAPTION>
                                                                            Capital      Operating
                                                                             Lease         Leases
                                                                            ----------------------
                                                                               (in thousands)
     <S>                                                                    <C>           <C>
     2002                                                                   $   738       $  4,016
     2003                                                                       738          3,538
     2004                                                                       738          3,052
     2005                                                                       738          2,444
     2006                                                                       838          2,306
     Thereafter                                                               3,996          6,789
                                                                            -------       --------
           Total                                                              7,786       $ 22,145
                                                                                          ========

     Less: Amount representing interest at 8.75%                             (2,626)
                                                                            -------
     Present value of net minimum lease payments                              5,160
     Less: Current portion of obligations under capital leases                 (296)
                                                                            -------
     Obligations under capital leases, excluding current portion            $ 4,864
                                                                            =======
</TABLE>

                                      F-30

<PAGE>

15. Commitments and Contingencies (continued)

Rental expense on operating leases for the years ended December 31, 2001, 2000
and 1999 was $5.5 million, $4.6 million and $2.1 million.

Litigation

Insight Kentucky and certain prior owners of the Kentucky Systems have been
named in class actions regarding the pass-through of state and local property
tax charges to customers by the prior owners of the Kentucky Systems. The
plaintiffs seek monetary damages and the enjoinment of the collection of such
taxes. We have reached an agreement in principle with the plaintiffs to settle
these lawsuits. Such settlement is awaiting the execution of definitive
documentation and a determination of fairness by the respective courts where
these matters were filed.

We have filed a state court action against the City of Louisville for its grant
of more favorable franchises to Knology, Inc. and TotaLink of Kentucky, LLC. Our
commencement of this action automatically suspended these franchises pending a
court determination. In November 2000, Knology Inc. filed a federal court action
against us seeking unspecified money damages and other relief for alleged
violations of federal laws arising out of our having filed, pursuant to the
provisions of our own franchise from the City, the state court action. In March
2001, the federal court preliminarily set aside the state court suspension of
Knology Inc.'s franchise. We believe we have substantial and meritorious
defenses to the asserted federal claims and intend to defend it vigorously.
Consequently, we have not recorded any loss reserves in the accompanying
financial statements.

We are subject to various legal proceedings that arise in the ordinary course of
business. While it is impossible to determine with certainty the ultimate
outcome of these matters, it is our opinion that the resolution of these matters
will not have a material adverse affect on our consolidated financial condition.

16. At Home Corporation

On September 28, 2001, At Home Corporation ("@Home"), the former provider of
high-speed data services for all of our systems except for those located in
Ohio, filed for protection under Chapter 11 of the Bankruptcy Code. For the
purpose of continuing service to existing customers and to resume the
provisioning of service to new customers, we entered into an interim agreement
with @Home to extend service through November 30, 2001. Further, in December
2001, we entered into an additional interim service arrangement whereby we paid
$10.0 million to @Home to extend service for three months through February 28,
2002 that is being recorded into expense ratably over the three-month period.

As a result of these interim arrangements we incurred approximately $2.8 million
in excess of our original agreed-to cost for such services rendered during the
year ended December 31, 2001. Additionally, we have recorded an allowance for
bad debt of $1.0 million for a net receivable from @Home in connection with
monies @Home collected from our high-speed data customers on our behalf

                                      F-31

<PAGE>

16. At Home Corporation (continued)

prior to September 28, 2001. These additional costs are included in
non-recurring high-speed data service charges in our statement of operations.

In December 2001, we entered into a four-year agreement with AT&T Corporation to
provide high-speed data service to all our affected systems. We transferred all
our affected systems to our own regional network that resides on AT&T
Corporation's platform. Such high-speed data services commenced progressively on
a system-by-system basis beginning in February 2002, with all affected systems
being served as of March 1, 2002.

17.  Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                               Three months ended                          Year ended
                                    --------------------------------------------------------------------
                                                                                                           December 31,
2001                                    March 31        June 30         September 30      December 31          2001
                                    -----------------------------------------------------------------------------------
                                                            (in thousands, except per share amounts)
<S>                                 <C>               <C>               <C>               <C>               <C>
Revenue                               $  168,537      $  175,310         $  177,393       $  183,139        $  704,379

Operating loss                           (13,230)        (14,976)           (14,122)         (28,505)          (70,833)

Net income (loss) before
 extraordinary item                        4,109         (21,874)           (20,150)         (30,788)          (68,703)

Net loss                                  (1,977)        (21,874)           (20,150)         (30,788)          (74,789)

Basic and diluted loss per share
 before extraordinary item                  (.07)           (.44)              (.42)            (.59)            (1.57)

<CAPTION>
                                                               Three months ended                          Year ended
                                    --------------------------------------------------------------------
                                                                                                           December 31,
2000                                 March 31 (1)     June 30 (1)       September 30      December 31          2000
                                    -----------------------------------------------------------------------------------
                                                            (in thousands, except per share amounts)

<S>                                 <C>               <C>               <C>               <C>               <C>
Revenue                               $  114,807      $  118,931         $  119,275       $  123,173        $  476,186

Operating loss                            (6,407)         (4,122)            (8,035)          (3,577)          (22,141)

Net income (loss)                         38,258          (8,984)           (11,882)         (60,379)          (42,987)

Basic and diluted income (loss)
per share                                   0.57           (0.23)            ( 0.28)           (1.08)            (1.03)
</TABLE>

(1) Include the results of Insight Ohio, accounted for under the equity method
prior to August 8, 2000, the date of acquisition.

                                      F-32