<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                              FORM 10-K/A-2

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


                  For the fiscal year ended December 31, 2000


                        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, 2001 was approximately $972 million.

     The number of shares of the registrant's common stock outstanding as of
February 28, 2001: 49,957,180 shares of Class A Common Stock and 10,226,050
shares of Class B Common Stock.
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                               Table of Contents

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                                                       PART I

Item 1.   Business ................................................................................................    1
Item 2.   Properties ..............................................................................................   32
Item 3.   Legal Proceedings .......................................................................................   33
Item 4.   Submission of Matters to a Vote of Security Holders .....................................................   34

                                                PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters ...................................   35
Item 6.   Selected Financial Data .................................................................................   35
Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations....................   39
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk...............................................   52
Item 8.   Financial Statements and Supplementary Data .............................................................   52
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.....................   52

                                                 PART III

Item 10.  Directors and Executive Officers of the Registrant ......................................................    53
Item 11.  Executive Compensation ..................................................................................    56
Item 12.  Security Ownership of Certain Beneficial Owners and Management ..........................................    60
Item 13.  Certain Relationships and Related Transactions ..........................................................    62

                                                   PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.........................................    65

SIGNATURES.........................................................................................................    68
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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. 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 thirteen headends after
giving effect to the network upgrades expected to be substantially completed
during 2001. 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 lead the cable television
industry in offering, 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.
Our 50% interest in Insight Midwest constitutes substantially all of our
operating assets. We serve as the manager of all of Insight Midwest's systems.
We also manage additional systems in Indiana and Kentucky owned by an affiliate
of AT&T Broadband serving approximately 121,200 customers for which we receive a
management fee equal to 3% of the gross revenues of those systems.

     As a result of our upgrade efforts, as of the end of 2000, we estimate that
94% of our customers (other than those served by our newly 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 2001, over 99%
of our customers (other than customers served by the recently acquired Illinois
systems) will be served by the upgraded network. We expect that the upgrade of
the new Illinois systems will be completed during 2002.

     To facilitate delivery of telephone services, we have entered into a ten-
year agreement with AT&T Broadband that will allow Insight Midwest to deliver to
our customers local telephone service under the AT&T Digital 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 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 530,000 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 as well
               as systems which we acquired from the AT&T cable subsidiaries
               (comprising in total approximately 280,000 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.

                                       1



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     We are the largest operator of cable television systems in the State of
Indiana. As of December 31, 2000, the Indiana systems passed approximately
515,800 homes and served approximately 320,000 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, approximately 95% 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
2001.

     We are also the largest operator of cable television systems in the State
of Kentucky. As of December 31, 2000, the Kentucky systems passed approximately
748,000 homes and served approximately 442,000 customers. Our Kentucky systems
are located in four of the five largest cities in the state: Louisville,
Lexington, Covington and Bowling Green. Upon completion of our consolidation of
headends, approximately 99% of Insight Kentucky's customers will be served by
four headends. The network upgrades and consolidation of headends are
substantially completed.

     As of December 31, 2000, the systems we manage for an affiliate of AT&T
Broadband passed approximately 176,900 homes and served approximately 121,200
customers. These managed systems are located adjacent to our existing Indiana
and Kentucky systems, and are operated by the employees of our existing systems.

     On a pro forma basis after giving effect to the AT&T transactions, as of
December 31, 2000, our Illinois systems passed approximately 664,900 homes and
served approximately 418,000 customers, making us the second largest operator of
cable television systems in the State of Illinois. The Illinois systems are
located primarily in second-tier markets, 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 five
headends. The network upgrades and consolidation of headends are expected to be
completed during 2002.

     As of December 31, 2000, our Ohio system passed approximately 184,400 homes
and served approximately 85,400 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. Approximately 70% 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 20,100 homes and served approximately 13,100 customers as of
December 31, 2000. The Griffin system operates from a single

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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 capitalize 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, will enhance 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 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.

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   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 with several industry leaders, including: (1) AT&T Broadband to
provide telephone services; (2) Excite@Home and RoadRunner to provide 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; (5) SourceSuite, LLC to provide an interactive
program guide as well as local information and community guides; and (6)
Commerce.TV Corporation to provide e-commerce over our networks.

   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 2000, 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.

   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

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       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, 2000, our systems, including the new Illinois systems,
were comprised of 30,700 miles of network serving approximately 1.4 million
customers and passing approximately 2.3 million homes resulting in a density of
approximately 75 homes per mile. As of that date, our systems were made up of an
aggregate of 97 headends. We intend to continue our strategy of consolidating
headends by eliminating approximately 77 headends, at which point 95% of our
customers will be served by thirteen headends. At the end of 2000, we estimate
that 94% of our customers (other than those served by the new Illinois systems)
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 a 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 coaxial 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 based on node location.


       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 intend to increase the reliability of the
services by 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

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       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. Excluding our new Illinois systems, as of December 31, 2000,
approximately 91.9% 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,
2000, premium units as a percentage of basic subscribers was approximately
69.4%, including our new Illinois Systems.

       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 programs.

   .   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 individually or in premium channel packages.

   .   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 brand.

       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. Our experience with our initial interactive digital launches is very
encouraging.

       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.

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       We are packaging a "Digital Gateway" brand. For $6.95 per month, our
customers receive the following services:

   .   A digital converter box;

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

   .   A local, interactive Internet-style service;

   .   A significant multiplexing of premium channels for customers who
       separately subscribe to premium channels, such as HBO and Showtime;

   .   Pay-per-view 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, 2000, we deployed 100,000 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.

       We have also entered into an agreement with Commerce.TV to provide e-
commerce over our networks. Commerce.TV owns a proprietary software and database
network which would provide our customers with the ability to purchase products
from third party merchants and track the status of their orders using a set-top
box remote control. We will be launching Commerce.TV in our Lexington, Kentucky
system early in the second quarter of 2001.

       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 20% and 30%
in less than two years from launch.

   High-Speed Data

       We offer high-speed data service for personal computers through
Excite@Home over our network in all of our upgraded systems except for our
Columbus, Ohio system, which utilizes the RoadRunner service.

                                       7
<PAGE>

As of December 31, 2000, the high-speed data service was made available in 1.5
million of our homes and served approximately 51,800 of our customers, including
our new Illinois systems. The Illinois systems we acquired from the AT&T cable
subsidiaries pursuant to the AT&T transactions which offer Excite@Home have
achieved an average Excite@Home penetration of 7.6% as of December 31, 2000.

       The broad bandwidth of our cable network enables data to be transmitted
up to 100 times 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.

       In addition to being an Internet service provider, Excite@Home offers its
own content for our customers. Excite@Home aggregates high quality web sites for
customers to explore and also offers various chat rooms, newsgroups, on-line
stores, gaming channels, on demand Fox News, NBA and MTV video clips, and easy
to use search engines and tip wizards. We expect to offer our customers content
of local interest, including community information, local news, sports,
entertainment, and weather, through our local home page.

       Our Insight@Home service offers unlimited access to the Internet. The
service includes three e-mail addresses and 15 megabytes of space with which to
create a personal web site. We are offering the Insight@Home service to cable
customers at a price of $29.95 per month plus $10 to $15 to lease the cable
modem. Customers may also purchase the cable modem. Non-cable customers are
charged an additional $10 per month for the service. Both cable and non-cable
customers are charged a $150 installation fee, which we may, at our discretion,
discount to promote usage of cable modems. Insight@Home also provides several
additional services, such as the ability to dial-up away from the customer's
home, multiple computer access and Internet fax services, which provides
additional revenue potential. In addition to customer fees, we expect to
generate advertising and e-commerce revenue by selling advertisers and retailers
space on our local home pages in exchange for a fee or a share of the revenues.


   Telephone Services

       On July 17, 2000, we entered into a ten-year agreement with AT&T
Broadband that will allow Insight Midwest to deliver to our customers local
telephone service under the AT&T Digital brand using our network infrastructure
and AT&T Broadband's switching and transport facilities. Insight Midwest will
lease certain capacity on our 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 and for the provision of customer care for customers
that buy bundled Insight Communications/AT&T Broadband services, AT&T Broadband
is required to pay it a monthly fee per customer. Insight Midwest also receives
an additional fee 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 brand as part of our
bundle of Insight Digital services. Insight Midwest markets the services, as
AT&T Broadband's agent, both on a stand-alone basis and bundled with our other
products and services,

                                       8
<PAGE>

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 the newly
acquired Illinois systems. If both parties agree, the agreements can be expanded
to include the new Illinois systems.


       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 a maximum 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.

       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 most recently on January 5, 2001 with respect to the new
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

                                       9
<PAGE>

of its customers. We believe that we have successfully transformed our assets so
that as of December 31, 2000, without giving effect to the Transactions, we
owned, operated and managed a cable television network serving approximately 1.0
million customers with approximately 98% 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, 2000, the Indiana systems passed approximately 515,800
homes and served approximately 320,000 customers. The Indiana systems are owned
by Insight Communications Midwest (formerly known as Insight Communications of
Indiana), 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 of the Indiana systems. In addition, 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 95% 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 121,200 customers. The systems are operated
by employees of our Indiana and Kentucky
                                       10
<PAGE>

systems, and the overhead for these systems is allocated and charged against the
cash flow of the managed systems.

       The Indiana systems are organized in four management districts:

       The Central District

       As of December 31, 2000, the Central District passed approximately
116,800 homes and served approximately 78,800 customers, principally in the
community of Bloomington. This includes approximately 28,300 homes passed and
approximately 14,800 customers served by the Greenwood, Indiana system which we
acquired on January 11, 2001. 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. Upon completion of our
network upgrade, we will migrate the Bloomington digital customers to our
interactive Insight Digital service. The Bloomington system began deploying the
Insight@Home service during the second quarter of 2000. Bloomington and parts of
Monroe County were upgraded to 750 MHz during the second quarter of 2000. We
expect to substantially complete the upgrade of this district by the end of
2001.

       The Southwest District

       As of December 31, 2000, the Southwest District passed approximately
122,700 homes and served approximately 59,900 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.

       In February 2000, 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. We have also launched the
Insight@Home service in Evansville.

       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
Indiana Gas and Electric Co. overbuild passes approximately 75,900 homes in our
service area and is expected to pass additional homes, and has commenced
offering telephone and data service.

       The Evansville system recently won a competitive bid to supply a data
network to the Evansville school system, as well as a contract to provide video
services to the University of Evansville. We are working with TCI Network
Solutions to supply this data network and have signed a five-year contract to
connect 42 K-12 schools to the data network. Our share of the revenues from this
contract will be $500,000 over the life of the contract.

       The Northwest District

       As of December 31, 2000, the Northwest District passed approximately
98,700 homes and served approximately 69,100 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

                                       11
<PAGE>

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, Kokomo and Fowler systems to 750 MHz were
substantially completed at the end of 2000. We launched the Insight@Home service
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,
during the first quarter of 2001, DIVA's video-on-demand service.

       The Northeast District

       As of December 31, 2000, the Northeast District passed approximately
177,600 homes and served approximately 112,200 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 is expected to be
completed by the end of first quarter 2001. We have launched the Insight@Home
service 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, during the second quarter of 2001, DIVA's video-on-
demand service.

   The Kentucky Systems

       General


       As of December 31, 2000, the Kentucky systems passed approximately
748,000 homes and served approximately 442,000 customers. This includes
approximately 40,900 homes passed and approximately 22,400 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. Upon
completion of the network upgrade, over 99% of Insight Kentucky's customers will
be served by a two-way active, 750 MHz network. Additionally, upon completion of
our consolidation of headends, approximately 99% of the systems' customers will
be served by four headends. The network upgrades and consolidation of headends
are substantially completed.

       Summary statistics for the Kentucky systems are as follows:

       Louisville

       As of December 31, 2000, the Louisville system passed approximately
447,700 homes and served approximately 254,500 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

                                       12
<PAGE>

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, where we currently
serve 61,900 customers. However, those franchises have been stayed pending
litigation.

       The Louisville system substantially completed a network upgrade and we
served substantially all of our customers with two-way, 750 MHz cable at the end
of 2000. The system is also in the process of interconnecting six headends,
which will allow the entire system to be served from a single headend. In the
spring of 2000, we began managing our Jeffersonville, Indiana system through the
Louisville system.

       InterMedia Capital Partners VI, L.P. launched its digital service in
Louisville in November 1998. The service had approximately 24,500 customers in
Kentucky as of December 31, 2000. We are migrating these customers to our
interactive Insight Digital service, including the LocalSource product and the
DIVA video-on-demand service. The Louisville system has launched the
Insight@Home service.

       Lexington

       As of December 31, 2000, the Lexington system passed approximately
122,300 homes and served approximately 84,100 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, at the end of
2000, we served all of our customers with two-way, 750 MHz cable. InterMedia
Capital Partners VI, L.P. launched its digital service in Lexington in October
of 1998. We are migrating these customers to our interactive Insight Digital
service, including the LocalSource product and the DIVA video-on-demand service.
The Lexington system has launched the Insight@Home service.

       Covington

       As of December 31, 2000, the Covington system passed approximately
143,800 homes and served approximately 80,900 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, at the end of
2000, we served all of our customers with two-way, 750 MHz cable. The Covington
system recently launched the Insight@Home service. Digital service is also
available in Covington. We are migrating the customers of this digital service
to our interactive Insight Digital service, including the LocalSource product
and the DIVA video-on-demand service.

       Bowling Green

       As of December 31, 2000, the Bowling Green system passed approximately
34,200 homes and served approximately 22,500 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

                                       13
<PAGE>

is approximately $45,400.

       The Bowling Green system is fully upgraded to two-way, 750 MHz cable.
Recently, digital and Insight@Home services have been launched in Bowling Green.
We are migrating the customers of this digital service to our interactive
Insight Digital service, including the LocalSource product.

   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 second-tier markets, 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 pass approximately 664,900 homes and
served 418,000 customers as of December 31, 2000, making us the second largest
operator of cable television systems in the State of Illinois. These systems are
served by networks with approximately 1,340 miles having a capacity greater than
or equal to 750 MHz, 3,830 miles having a capacity greater than or equal to 450
MHz and less than 750 MHz, and 1,230 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 completed during 2002. In the interim, we will launch Insight Digital on a
node-by-node basis as system upgrades are completed. We anticipate the initial
deployments of the DIVA video-on-demand service by the end of 2001 in selected
areas in the Illinois systems.

       The Illinois systems are organized in five management districts:

       The Rockford District

       As of December 31, 2000, the Rockford District passed approximately
127,600 homes and served approximately 81,500 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 in February 2000, 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 19.5% digital penetration from its customers, with incremental
revenue per digital customer of approximately $21 per month. Average monthly
revenue per customer increased by approximately 21.0% for the year ended
December 31, 2000, compared to the year ended December 31, 1999, primarily as a
result of the increase in digital penetration. We launched the Insight@Home
service throughout the system in April 2000, and have achieved a penetration of
2.8% as of December 31, 2000.

       The Peoria District

       As of December 31, 2000, the Peoria District passed approximately 194,700
homes and served approximately 125,200 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

                                       14
<PAGE>

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 City of Galesburg is considering a municipal
overbuild passing approximately 17,000 homes as of December 31, 2000.

       The Peoria system is currently undergoing a network upgrade from 550 MHz
to 860 MHz, which is expected to be completed during 2002. An AT&T cable
subsidiary launched digital service and achieved penetration levels of nearly
18% in areas where digital service is available. We plan 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 has
launched the @Home service and has achieved penetration levels of over 7% as of
December 31, 2000.

       The Dixon District

       As of December 31, 2000, the Dixon District passed approximately 67,200
homes and served approximately 46,400 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 by the end of 2002. An AT&T cable subsidiary
launched digital service and achieved penetration levels of nearly 12% in areas
where the service is available. We plan to migrate these customers to our
interactive Insight Digital service, including the LocalSource product and the
DIVA video-on-demand service during 2002.

       The Springfield District

       As of December 31, 2000, the Springfield District passed approximately
179,300 homes and served approximately 115,100 customers, principally in the
communities of Decatur and Springfield. 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, in which our
system passes approximately 60,900 homes, 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. An AT&T cable subsidiary launched digital service
in the system and achieved penetration levels of over 20% in the areas where the
service is available. We plan 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 has begun to roll-out the
Insight@Home service on a node-by-node basis.


       The Champaign District

       As of December 31, 2000, the Champaign District passed approximately
96,100 homes and served approximately 49,800 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. An AT&T cable subsidiary launched digital service in
the system and had approximately 5,400

                                       15
<PAGE>

customers as of December 31, 2000. We plan 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 2001. The Champaign District has
launched the @Home service and as of December 31, 2000 had over 6,300 customers.

   The Griffin, Georgia System

       Our 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, 2000, the Griffin, Georgia system passed
approximately 20,100 homes and served approximately 13,100 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 18% penetration within two years of launch,
generating incremental revenue per month of over $19.00 per digital customer.
The Griffin launch was the first digital deployment of our multi-tiered approach
in the country. We will begin upgrading the Griffin system to enhance the
digital service during 2001.

   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, 2000, the Ohio system passed
approximately 184,400 homes and served approximately 85,400 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 2.3%. 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 interactive
information service. As of December 31, 2000, approximately 60,000 customers
were served by the upgraded network, with approximately 47,800 customers served
by activated digital nodes, and approximately 13,400 customers have subscribed
to our interactive digital service, representing a penetration of over 28%. We
entered into an affiliation agreement with RoadRunner and a network service
agreement with High Speed Access Corp. to deploy the RoadRunner high-speed data
service. The RoadRunner service was launched during the second quarter of 2000,
and has achieved a penetration of 4.5% as of December 31, 2000. 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. Ameritech 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

                                       16
<PAGE>

distinct areas and therefore do not compete with one another. The areas of the
Ohio system served by both us and Ameritech pass approximately 142,700 homes,
representing 77.3% 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 Ameritech 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, 2000, the weighted average revenue for our monthly
combined basic and classic service was approximately $30.46. The national
average was estimated to be $30.08 for the same services as of December 30,
2000, 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. We regularly use targeted
telemarketing campaigns to sell to our existing 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 displays
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.

       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 130 cable networks competing for carriage on our
analog and digital

                                       17
<PAGE>

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.

       Prior to November 1999, the cable systems contributed by us to Insight
Midwest pursuant to the AT&T transactions were entitled to buy programming
services at the favorable rates being charged to MediaOne Group. Since that
time, such systems have been purchasing programming services at higher rates.
These systems are now able to purchase programming services at the more
favorable rates charged by Satellite Services.

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 outstanding 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. We believe that our
ongoing community relations initiatives result in consumer and governmental
goodwill and name recognition, which have increased customer loyalty and will
likely facilitate 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. Awards have been received from such diverse
organizations as the Epilepsy Foundation, the YMCA Black Achievers, the Domestic
Violence Center and Project Welcome Home, which provides assistance to less
fortunate people in the community.

       Cable industry recognition and awards for excellence in marketing and
programming have been received by several of our systems including the
Lafayette, Indiana system.

       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.

       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.

                                       18
<PAGE>

       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. Customized local content will be available to our customers through
our digital cable and high-speed data services, as users will be able to access
local information, such as weather reports, school closings and community event
schedules on-demand.

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, 2000, 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 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,
2000:

<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*...................       17                   3.3%                 13,463                   1.1%
2001.......................       30                   5.8                  82,523                   6.4
2002.......................       23                   4.4                  41,928                   3.3
2003.......................       40                   7.7                 102,416                   8.0
2004.......................       35                   6.8                  54,015                   4.2
After 2004.................      372                  72.0                 984,176                  77.0
</TABLE>

                                       19
<PAGE>

       The following table summarizes information relating to the year of
expiration of our franchises, including the managed systems, as of December 31,
2000:

<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*.....................           30                    5.0%                 35,749                 2.5%
2001.........................           42                    7.0                 107,114                 7.7
2002.........................           29                    4.9                  53,607                 3.8
2003.........................           44                    7.4                 103,893                 7.4
2004.........................           40                    6.7                  65,114                 4.7
After 2004...................          412                   69.0               1,034,275                73.9
</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. Recently enacted legislation 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

                                       20
<PAGE>

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, 2000, our Evansville, Indiana and Columbus,
Ohio systems were overbuilt. As a result, approximately 9.5% 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 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 was recently 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 17.1% 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
28 GegaHertz (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 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.

                                       21
<PAGE>

       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 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. In addition, the 1996 Telecom Act required the
FCC to undertake a number of rulemakings to implement the legislation, some of
which have yet to be completed, and such proceedings may materially affect the
cable television industry.


   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.

                                       22
<PAGE>

       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 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 and the FCC, respectively,
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

                                       23
<PAGE>

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 December 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 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

                                       24
<PAGE>

       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 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

                                       25
<PAGE>

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 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 have been eliminated, although the
FCC's regulations prohibiting broadcast/cable common-ownership currently remain
in effect. 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 has
recently upheld the constitutionality of these rules. A petition for certiorari
has been denied by the Supreme Court. The U.S. Court of Appeals for the District
of Columbia Circuit has recently decided an appeal on the rules themselves. In
that decision, the Court reversed and remanded the horizontal and vertical
ownership for further proceedings.

       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,

                                       26
<PAGE>

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 over competitors
and requires such programmers to sell their programming to other multichannel
video distributors. This provision limits the ability of vertically integrated
cable programmers to offer exclusive programming arrangements to cable
companies. 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 prohibition is necessary to preserve and protect competition in
video programming distribution. We expect the FCC to make a determination on
this issue in 2001.

       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.

       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

                                       27
<PAGE>

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, are 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 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

                                       28
<PAGE>

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 new formula begin 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 has agreed to review 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

                                       29
<PAGE>

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 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

                                       30
<PAGE>

capacity broadband transmission facilities and cable modems. We compete with
many other providers of Internet access services which are known as Internet
service providers. Internet service providers include such companies as America
Online and Mindspring Enterprises as well as major telecommunications providers,
including AT&T and local exchange telephone companies. Recently, several
Internet service providers asked the FCC as well as local authorities to require
cable companies offering Internet access services over their broadband
facilities to allow access to those facilities on an unbundled basis to other
Internet service providers. In a recent report on the deployment of advanced
telecommunications capability under Section 706 of the 1996 Telecom Act, the FCC
declined to convene a proceeding to consider whether to impose such an access
requirement on cable companies. However, the FCC indicated that it would
continue to monitor the issue of broadband deployment and, to that end, the FCC
has recently issued a notice of inquiry in which it asks, among other things,
questions regarding what regulatory approach it should pursue. Also, the FCC
denied requests by certain Internet service providers that it condition its
approval of the merger of AT&T Broadband and TCI, now known as AT&T Broadband,
on a requirement that those companies allow access by Internet service providers
to their broadband facilities. Several local jurisdictions also are reviewing
this issue. Last year, the Ninth Circuit overturned a requirement, imposed by a
local franchising authority in the context of a franchise transfer, that the
cable operator, if it chooses to provide Internet service, must provide open
access to its system for other Internet service providers on the ground that
Internet access is not a cable service and thus is not subject to local
franchising authority regulation. U.S. District Courts in Virginia and Florida
have also held that a local franchising authority cannot impose an open access
requirement. An appeal from the Virginia ruling is pending before the Fourth
Circuit.

       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.

   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

                                       31
<PAGE>

incumbent local telephone companies as required of them by the 1996 Telecom Act.

       In January 1999, the United States Supreme Court reversed and vacated in
part an earlier decision of a federal court of appeals striking down portions of
the FCC's 1996 rules governing local telecommunications competition. The 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 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 decided to
review this decision (consolidated with four other lower court challenges to the
FCC's interconnection rules) in its next session, which commences in October
2001. In April 2000, the FCC ruled that incumbent local exchange carriers must
use their "best efforts" to acquire intellectual property rights from third
party vendors for the benefit of a competing carrier seeking unbundled access to
network elements associated with such intellectual property rights.

Employees

       As of December 31, 2000, after giving effect to the AT&T transactions, we
employed approximately 2,600 full-time employees and 120 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.

                                       32
<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 enjoyment of the collection of such
taxes. The amount of damages sought by the plaintiffs is not ascertainable at
this time. To date, the class of potential plaintiffs has not been certified by
the court; therefore, it is not yet possible to estimate the potential damages.
If certification is granted, the plaintiffs will then be required to prepare a
statement of alleged damages. 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. The classes have not been certified in these
actions and we are defending these actions vigorously. Plaintiff's counsel filed
an additional class action lawsuit in Boone County Circuit Court entitled R.
Stafford Johnson v. Insight Kentucky Partners II, L.P., TCI/TKR of Northern
Kentucky, Inc. et. al. on October 27, 1999, making the same allegations as the
other filed actions. This lawsuit was dismissed on January 21, 2000, due to the
existence of the Franklin County case, which was held to be a superior action
with identical issues. We believe that the Kentucky systems have substantial and
meritorious defenses to these claims, especially claims by customers that reside
in the communities that have entered into settlement agreements with the
Kentucky systems, as described above. Motions to dismiss both the Jefferson
County and Franklin County actions were denied and we have filed appeals of
these decisions to the Supreme Court of Kentucky. In addition, the Kentucky
systems have filed a declaratory judgement action in the United States District
Court for the Eastern District of Kentucky asking the federal courts to declare
that the issues at bar in the purported class actions are preempted under
federal law. This action was dismissed by the District Court and is on appeal to
the 6th Circuit Court of Appeals. On April 30, 1999, InterMedia Capital Partners
VI, L.P. submitted a request for indemnity to affiliates of AT&T Broadband for
certain losses arising out of these matters pursuant to the contribution
agreement dated October 30, 1997 under which these systems were contributed to
InterMedia Capital Partners VI, L.P.

       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 stays the grant of these franchises until the court determines
whether the franchises were granted on more favorable terms. These actions are
awaiting finalization of a discovery schedule. On November 8, 2000, Knology
filed a federal court action in the United States District Court for the Western
District of Kentucky, naming Insight

                                       33
<PAGE>

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. Both the motion to dismiss and the
motion for preliminary injunction are pending before the federal court. We
believe the claims in the federal action to be without merit 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>

                                    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 ("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
-------------                   ----     ---

September 30, 1999*           $33.875  $25.250
December 31, 1999             $31.250  $19.625

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

_______________
*Period began on July 21, 1999, the date our Class A common stock commenced
trading.

     At February 28, 2001, there were approximately 230 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 2000, we granted stock options to certain of
our employees to purchase an aggregate of 57,500 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) and in compliance with Rule 506
thereunder.


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, 2000. 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 herein, as well as "Management's Discussion and
Analysis of Financial Condition and Results of Operations," also included
herein.

                                       35
<PAGE>

<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                        -------------------------------------------------------
                                                                           2000        1999        1998       1997       1996
                                                                        -------------------------------------------------------
                                                                             (dollars in thousands, except per share data)
<S>                                                                     <C>          <C>         <C>        <C>        <C>
Statement of Operations Data:
    Revenues                                                            $ 476,186    $242,693    $112,902   $ 67,698   $ 61,839
    Operating costs and expenses:
      Programming and other operating costs                               167,163      71,956      30,376     18,397     16,774
      Selling, general and administrative expenses                         94,922      55,198      24,471     15,020     14,062
      Non-cash compensation and related charges                                 -      19,285           -          -          -
      Depreciation and amortization                                       236,242     131,308      43,849     18,125     15,694
                                                                        -------------------------------------------------------
     Total operating costs and expenses                                   498,327     277,747      98,696     51,542     46,530
                                                                        -------------------------------------------------------
    Operating income (loss)                                               (22,141)    (35,054)     14,206     16,156     15,309

    Other income (expense):
      Gain (loss) on cable systems exchange                                  (956)     15,799     111,746     78,931
      Gain on contribution of cable systems to joint venture                    -           -      44,312          -
      Interest expense, net                                              (109,753)    (50,398)    (28,106)   (15,962)   (17,644)
      Other                                                                  (294)       (345)       (444)         -          -
                                                                        -------------------------------------------------------
      Total other income (expense)                                       (111,003)    (34,944)    127,508     62,969    (17,644)
                                                                        -------------------------------------------------------
    Income (loss) before minority interest and equity in losses
      of investees                                                       (133,144)    (69,998)    141,714     79,125     (2,335)

    Minority interest                                                      67,773      31,339       3,410          -
    Equity in losses of investees                                          (3,830)    (13,963)     (3,251)         -
    Gain on sale of equity investments                                     80,943           -           -          -
    Impairment of investments                                             (88,554)          -           -          -
                                                                        -------------------------------------------------------
    Income (loss) before income taxes and
      extraordinary item                                                  (76,812)    (52,622)    141,873     79,125     (2,335)
    Provision (benefit) for income taxes                                  (33,825)     31,586           -
                                                                        -------------------------------------------------------
    Income (loss) before extraordinary item                               (42,987)    (84,208)    141,873     79,125     (2,335)
    Extraordinary loss from early extinguishment of debt                        -           -      (3,267)    (5,243)      (480)
                                                                        -------------------------------------------------------
    Net income (loss)                                                     (42,987)    (84,208)    138,606     73,882     (2,815)
    Accrual of preferred interests                                        (18,725)          -           -          -          -
    Accretion of redeemable Class B common units                                -      (7,118)     (5,729)         -          -
    Accretion to redemption value of preferred limited units                    -           -           -    (15,275)    (5,421)
                                                                        -------------------------------------------------------
    Net income (loss) applicable to common shareholders                 $ (61,712)   $(91,326)   $132,877   $ 58,607   $ (8,236)
                                                                        =======================================================

    Basic income (loss) per share before extraordinary item             $   (1.03)   $  (2.58)   $   6.71   $   2.02   $  (0.24)
    Diluted income (loss) per share before extraordinary item           $   (1.03)   $  (2.58)   $   4.55   $   1.87   $  (0.24)
    Basic income (loss) per share                                       $   (1.03)   $  (2.58)   $   6.55   $   1.86   $  (0.26)
    Diluted income (loss) per share                                     $   (1.03)   $  (2.58)   $   4.61   $   1.78   $  (0.26)
</TABLE>

                                       36
<PAGE>

<TABLE>
<CAPTION>
                                                        2000         1999        1998        1997        1996
                                                     -----------------------------------------------------------
                                                                       (dollars in thousands)
<S>                                                  <C>          <C>          <C>         <C>         <C>
Other Financial Data:
   EBITDA (1)                                        $  269,183   $  129,084   $ 213,828   $ 113,212   $  31,003
   Adjusted EBITDA (2)                                  214,101      115,539      58,055      34,281      31,003
   Adjusted EBITDA margin (3)                              45.0%        47.6%       51.4%       50.6%       50.1%
   Capital expenditures                                 262,241      135,929      44,794      27,981      16,414
   Net cash provided by operating activities             91,632       96,448      44,760      10,436      15,976
   Net cash used in investing activities               (279,810)    (516,487)   (142,190)    (27,981)    (16,589)
   Net cash provided by financing activities            108,400      513,648     116,250      17,891         870

Balance Sheet Data:
   Cash and cash equivalents                         $   33,733   $  113,511   $  19,902   $   1,082   $     738
   Property, plant and equipment, net                   820,888      643,138     155,412      63,842      36,079
   Total assets                                       2,244,586    1,989,470     660,916     158,103      68,574
   Total debt                                         1,372,523    1,233,000     573,663     207,488     178,327
   Partners' (deficit) stockholders' equity             540,680      588,060      (7,928)   (127,982)   (177,837)
</TABLE>


<TABLE>
<CAPTION>
                                                            As of December 31, 2000, except where noted
                                                --------------------------------------------------------------------
                                                                             Pro Forma
                                                --------------------------------------------------------------------
                                                Indiana   Kentucky    Illinois      Ohio      Managed      Total
                                                Systems    Systems   Systems (4)   System   Systems (5)   Systems
                                                -------    -------   -----------   ------   -----------   -------
<S>                                             <C>       <C>        <C>          <C>       <C>          <C>
Technical Data:
   Network miles                                  7,752      8,998        7,876     2,686        3,368      30,680
   Number of headends                                28         11           39         1           18          97
   Number of headends expected
     upon completion of upgrades
     during 2001 (6) (7)                              6          5            8         1            0          20
   Number of headends serving
     95% of our customers expected
     upon completion of upgrades
     during 2001 (6) (7)                              3          4            5         1            0          13

Operating Data:
   Homes passed (8)                             515,800    748,000      685,100   184,400      176,900   2,310,200
   Basic customers (9)                          320,000    442,000      431,100    85,400      121,200   1,399,700
   Basic penetration (10)                          62.0%      59.1%        62.9%     46.3%        68.5%       60.6%
   Digital ready homes (11)                     246,800    404,700      364,700    47,800            0   1,064,000
   Digital customers (12)                        27,900     47,000       63,800    13,400            0     152,100
   Digital penetration (13)                        11.3%      11.6%        17.5%     28.0%           0        14.3%
   Premium units (14)                           208,000    290,700      345,200    84,700       43,300     971,900
   Premium penetration (15)                        65.0%      65.8%        80.1%     99.2%        35.7%       69.4%
   Cable modem customers (16)                     7,800     15,700       23,400     4,900            0      51,800

</TABLE>


(1)  Represents earnings (loss) before interest, taxes, depreciation and
     amortization.  Our management believes 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

                                       37
<PAGE>

     flows as a measure of liquidity, as determined in accordance with generally
     accepted accounting principles. EBITDA, as computed by management, 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 prior to non-cash items and other non-recurring income
     and expense items. The following table sets forth a reconciliation of
     EBITDA to Adjusted EBITDA:

<TABLE>
<CAPTION>

                                                                              Year Ended December 31,
                                                              ----------------------------------------------------------
                                                                 2000        1999       1998         1997        1996
                                                               --------    --------   ---------    --------    --------
<S>                                                            <C>         <C>        <C>          <C>         <C>
     EBITDA.................................................   $269,183    $129,084   $ 213,828    $113,212    $ 31,003
     Equity in losses of investees..........................      3,830      13,963       3,251          --          --
     Gain on sale of equity investments.....................    (80,943)         --          --          --          --
     Minority interest......................................    (67,773)    (31,339)     (3,410)         --          --
     Other (income) expense.................................        294         345         444          --          --
     Gain on contribution of cable systems to joint
      venture...............................................         --          --     (44,312)         --          --
     (Gain) loss on cable system exchanges..................        956     (15,799)   (111,746)    (78,931)         --
     Non-cash compensation and related charges..............         --     (19,285)         --          --          --
     Impairment of investments..............................     88,554          --          --          --          --
                                                               --------    --------   ---------    --------    --------
     Adjusted EBITDA........................................   $214,101    $115,539   $  58,055    $ 34,281    $ 31,003
                                                               ========    ========   =========    ========    ========
</TABLE>

(3)  Represents Adjusted EBITDA as a percentage of total revenues.

(4)  Includes our Griffin, Georgia system.

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

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

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

(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

                                       38
<PAGE>

     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 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 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 year ended December 31, 2000. Prior to 2000,
we accounted for our 75% non-voting common equity interest in Insight Ohio under
the equity method.

                                       39
<PAGE>




       On January 5, 2001, we completed a series of transactions with the AT&T
cable subsidiaries that increased by 530,000 the number of customers we serve.
Specifically, Insight Midwest acquired:

           .  all of our systems not already owned by Insight Midwest as well as
              systems which we acquired from AT&T cable subsidiaries (comprising
              in total approximately 280,000 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.

Results of Operations

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

           We have generated increases in revenues and Adjusted 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,
                                                                           ---------------------------------------------
                                                                              2000              1999              1998
                                                                           ---------         ---------         ---------
                                                                                           (in thousands)
<S>                                                                        <C>               <C>               <C>
Revenues  ........................................................         $ 476,186         $ 242,693         $ 112,902
Costs and expenses:
     Programming and other operating costs........................           167,163            71,956            30,376
     Selling, general and administrative..........................            94,922            55,198            24,471
     Non-cash compensation and related charges....................                --            19,285                --
     Depreciation and amortization................................           236,242           131,308            43,849
                                                                           ---------         ---------         ---------
Operating income (loss)...........................................           (22,141)          (35,054)           14,206
EBITDA............................................................           269,183           129,084           213,828
Adjusted EBITDA...................................................           214,101           115,539            58,055
Interest expense, net.............................................          (109,753)          (50,398)          (28,106)
Net income (loss).................................................           (42,987)          (84,208)          138,606
Net cash provided by operating activities.........................            91,632            96,448            44,760
Net cash used in investing activities.............................          (279,810)         (516,487)         (142,190)
Net cash provided by financing activities.........................           108,400           513,648           116,250
</TABLE>

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

                                       40

<PAGE>



     Revenues increased 96.2% to $476.2 million for the year ended December 31,
2000 compared to $242.7 million for the year ended December 31, 1999 due
primarily to the Kentucky acquisition and the consolidation of Insight Ohio. The
incremental revenue generated by 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.
Revenues by service offering are as follows:

<TABLE>
<CAPTION>
                                              Year Ended December 31,
                  --------------------------------------------------------------------------------
                                  2000                                       1999
                  -----------------------------------       --------------------------------------
                                                (dollars in thousands)
                      Revenues by          % of Total            Revenues by         % of Total
                   Service Offering         Revenues           Service Offering       Revenues
                   ----------------         --------           ----------------       --------
<S>                 <C>                 <C>                    <C>                   <C>
Basic                  $329,767              69%                   $172,199              71%
Premium                  46,331              10                      24,434              10
Pay-Per-View              6,833               2                       3,354               1
Digital                  15,879               3                       6,919               3
Advertising sales        35,244               7                      17,478               7
Data services            10,314               2                       1,263               1
Telephone                    --               0                          --               0
Other                    31,818               7                      17,046               7
                       --------             ---                    --------             ---

                       $476,186             100%                   $242,693             100%
                       ========             ===                    ========             ===
</TABLE>

     Revenues per customer per month averaged $42.92 for the year ended
December 31, 2000 compared to $38.44 for the year ended December 31, 1999
primarily reflecting an increase 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 reflecting rate increases associated with the completion of rebuilds. 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 132.3% to $167.2 million
for the year ended December 31, 2000 compared to $72.0 million for the year
ended December 31, 1999. The incremental expense generated by the Kentucky
systems approximated $62.3 million accounting for 65.4% of the consolidated
expense increase and the consolidation of Insight Ohio accounted for
approximately $19.0 million or 20.0% of the consolidated expense increase.
Excluding these systems, these costs increased by approximately $13.9 million
accounting for approximately 14.6% of the total increase, primarily as a result
of increased programming rates and additional programming carried by the
systems.

       Selling, general and administrative expenses increased 72.0% to $94.9
million for the year ended December 31, 2000 compared to $55.2 million for the
year ended December 31, 1999. The incremental expense generated by the Kentucky
systems approximated $25.5 million accounting for 64.1% of the consolidated
expense increase and the consolidation of Insight Ohio accounted for
approximately $10.6 million or 26.6% of the consolidated expense increase.
Excluding these systems, these costs increased by approximately $3.6 million
accounting for approximately 9.3% of the total increase, primarily reflecting
increased marketing activity and corporate expenses associated with new product
introductions.

       Depreciation and amortization expense increased 79.9% to $236.2 million
for the year ended December 31, 2000 compared to $131.3 million for the year
ended December 31, 1999. This increase was primarily due to the acquisitions and
addition of the cable systems discussed above 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 which was recorded in the third quarter of 1999.

       EBITDA increased 108.5% to $269.2 million for the year ended December 31,
2000 as compared to $129.1 million for the year ended December 31, 1999 for the
following reasons:

          .    The first full year of results generated by the Kentucky
               acquisition and the consolidation of Insight Ohio in 2000;

          .    A gain of $80.9 million on the sale of joint venture assets to
               Liberate Technologies, as compared to a gain on systems exchanges
               of $15.8 million for the year ended December

                                       41
<PAGE>

               31, 2000 and December 31, 1999, respectively;

          .    Minority interest income increased to $67.8 million for the year
               2000 compared to $31.3 million for the year 1999 primarily due to
               the Kentucky acquisition;

          .    Offsetting these gains was an impairment of investments totaling
               $88.6 million which decreased EBITDA for the year ended December
               31, 2000.

     Interest expense, net increased 117.8% to $109.8 million for the year ended
December 31, 2000 compared to $50.4 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%.

     A benefit for income taxes totaling $33.8 million was recorded for the year
ended December 31, 2000. For the year ended December 31, 1999, the tax provision
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.

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

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Revenues increased 115.0% to $242.7 million for the year ended December
31, 1999 as compared to the prior year. The incremental revenue generated from
the Indiana systems contributed by AT&T Broadband on October 31, 1998
approximated $58.1 million and accounted for 44.8% of the total increase in
revenue. The October 1, 1999 acquisition of Insight Kentucky accounted for
approximately $57.0 million or 43.9% of the revenue increase. Excluding the
transactions described above, revenues increased by approximately 13.0% due to
an increase of approximately 5,600 customers on average, and an increase of
approximately $2.80 in the average monthly revenue per customer.

     Revenues per customer per month averaged $38.44 for the year ended
December 31, 1999, compared to $32.80 for the prior year primarily reflecting a
12.4% increase in average monthly basic revenue per customer of $3.01. Average
monthly basic revenue per customer was $27.28 for the year ended December 31,
1999 versus $24.27 for the prior year reflecting the activation of nodes in
rebuilt areas of certain Indiana systems and the Rockford, Illinois system.
Advertising revenue per customer per month increased 74.8% to $2.79 during 1999
compared to $1.60 in 1998 as we brought advertising in-house, capitalizing on
its clustered systems. Reflecting strong digital growth, average digital revenue
per basic customer increased 482.6% to $.84, or $5.3 million.

     Programming and other operating costs increased 136.9% to $72.0 million
for the year ended December 31, 1999 as compared to the prior year. The Kentucky
acquisition accounted for approximately 45.8% of the increase and the additional
Indiana systems contributed by AT&T Broadband on October 1, 1998 accounted for
approximately 37.3% of the increase. Excluding the aforementioned transactions,
programming costs increased by approximately 23.1% to $37.4 million, primarily
as a result of increased programming costs and additional programming carried by
our systems.

     Selling, general and administrative expenses increased 125.6% to $55.2
million for the year ended December 31, 1999 as compared to the prior year. The
Kentucky acquisition accounted for approximately 32.7% of the increase and the
additional systems contributed by AT&T Broadband on

                                       42
<PAGE>

October 31, 1998 accounted for approximately 38.0% of the increase. Excluding
these transactions, these SG&A costs increased by approximately 36.9% to $33.5
million, primarily reflecting increased marketing activity associated with new
product introductions and increased corporate expenses.

     Depreciation and amortization expense increased 199.5% to $131.3 million
for the year ended December 31, 1999 as compared to the prior year. This
increase was primarily due to the acquisitions and additional capital
expenditures associated with the rebuilds of our systems.

     For the year ended December 31, 1999, operating income decreased to a
loss of $35.1 million, a decrease of 346.7% from the prior year as a result of
the items discussed above. The operating loss for 1999 includes a one-time non-
cash compensation expense of $19.3 million which was recorded in the third
quarter of 1999.

     Interest expense increased 79.3% to $50.4 million for the year ended
December 31, 1999 compared to the prior year. The increase was primarily due to
higher average outstanding indebtedness related to acquisitions. Average debt
outstanding during 1999 was $714.4 million at an average interest rate of 8.0%.

     EBITDA decreased 39.6% to $129.1 million for the year ended December 31,
1999 as compared to the prior year primarily due to gains realized upon the
formation of Insight Communications Midwest in 1998 of $156.1 million compared
to $15.8 million in gains realized on system exchanges during 1999. Excluding
these non-operating gains, operating income before depreciation and amortization
and non cash compensation and related charges increased $57.5 million
attributable to acquisitions and the results discussed above. See the
"Consolidated Statement of Cash Flows" for an analysis of net cash provided by
operating activities, used in investing activities and provided by financing
activities.

     For the year ended December 31, 1999, adjusted EBITDA totaled $115.5
million, an increase of 99% over the prior year. Adjusted EBITDA represents
EBITDA excluding any non-cash items such as a gain or loss on sales or exchanges
of assets, non-cash compensation and related charges, minority interest, equity
in losses of investees and other non-recurring income and expense items.

     A provision for income taxes of $31.6 million was recorded during 1999,
which consisted of a $39.5 million one-time charge due to the exchange of
limited partnership units in Insight LP for our common stock. In addition, we
recorded an $8.2 million deferred tax benefit relating to losses from operations
subsequent to the conversion and a current provision of approximately $300,000
for state and local taxes.

     Net income decreased 160.7% to a loss of $84.2 million for the year ended
December 31, 1999 primarily reflecting an $87.5 million increase in depreciation
and amortization and a $140.2 million decrease in gains realized on systems
exchanged and on systems contributed which resulted from the formation of
Insight Communications Midwest during 1998.

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 private and public debt and equity.

                                       43
<PAGE>

          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.

          For the year ended December 31, 1999 and the year ended December 31,
2000, we spent $135.9 million and $262.2 million, respectively, for capital
expenditures largely to support our network upgrades, digital converter
purchases and to a lesser extent network extensions. For the year ended December
31, 1999 and the year ended December 31, 2000, cash from operations totaled
$96.4 million and $91.6 million, respectively, which together with borrowings
under our credit facilities, funded the above noted capital expenditures.


          For the year ending December 31, 2001, it is anticipated that we will
spend approximately $300 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. 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 Insight Midwest increased by 530,000. 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 million to
repay the Indiana and Kentucky credit facilities and $685 million to finance the
AT&T transactions, providing for unused availability of approximately $402
million to support the aforementioned capital expenditures.

          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.

          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

                                       44
<PAGE>


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, maturing in September 2004, which supports the Ohio system. As of
December 31, 2000, $25.0 million was outstanding under this credit facility.


          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
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.

          We have a substantial amount of debt.  Our high level of combined 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 and our cash flow
from operations are sufficient to support our current operating plan. We intend
to draw upon the $402 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.

Impact of Recently Issued Accounting Standards

                                       45

<PAGE>

          In June 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133,
as amended by SFAS No. 137, became effective for us on January 1, 2001. SFAS No.
133 will require us to recognize all derivatives on the balance sheet at fair
value. At December 31, 2000, our derivative financial instruments include
interest rate swap and collar agreements, which we believe qualify as cash flow
hedges, with a fair value of ($1.9) million. Changes in the fair value of
derivative financial instruments are either recognized in income or in
shareholders' equity as a component of comprehensive income depending on whether
the derivative financial instruments qualify for hedge accounting.

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 and is presented on a pro forma
basis to give effect to the AT&T transactions and our 12 1/4% senior discount
notes offering.

<TABLE>
<CAPTION>
                                                                                             As of December 31,
                                                                                                    2000
                                                                                                 Pro Forma
                                                                                           ----------------------
                                                                                           (dollars in thousands)
<S>                                                                                        <C>
Total debt ...............................................................................       $2,258,123
Stockholders' equity .....................................................................          620,555
Debt to equity ratio .....................................................................              3.6x
</TABLE>

          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;


     .   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.




                                       46
<PAGE>

     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 pro forma revenues and pro forma EBITDA in fiscal 1999.
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 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.

          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.

                                       47



<PAGE>





          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 of $52.6 million for
the year ended December 31, 1999 and $76.8 million for the year ended December
31, 2000. On a pro forma basis after giving effect to the AT&T transactions we
would have reported a net loss before taxes of $169.9 million for the year ended
December 31, 1999 and $116.7 million for the year ended December 31, 2000.


          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

                                       48
<PAGE>


not generate sales at or exceeding historical levels.

          We have served the customers of our existing Indiana systems for two
years and the customers of our existing Kentucky systems for one year, and we
are still in the process of integrating these systems. 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 2000, 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, without
giving effect to the AT&T transactions, for the year ended December 31, 2000.





                                       49
<PAGE>





     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 2000 and 1999 was 1.8% in each year, while satellite penetration as of
December 2000 averaged 17.1% nationwide, up from 11.5% in December 1999. 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
geographic areas where a secondary franchise is obtained and a cable network is
constructed is called "overbuilding." As of December 31, 2000, approximately
9.5% 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 75,900 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 our City of Louisville, Kentucky system
which passes approximately 61,900 homes, although those franchises have been
stayed pending litigation. TotaLink of Kentucky, LLC is also in discussions with
the Jefferson County local franchising authority to obtain a franchise to
provide cable television in our system which passes approximately 139,200 homes.
In addition, Ameritech has overbuilt our Columbus, Ohio system and passes
approximately 142,700 homes also passed by us. In our newly acquired Illinois
system, the cities of Galesburg which passes approximately 17,000 homes and
Springfield which passes approximately 60,900 homes are considering municipal
overbuilds. We cannot predict what affect 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

                                       50
<PAGE>

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 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 inquiry 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.



          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.




                                       51

<PAGE>





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 counterparties to our swap and collar
agreements are major financial institutions. As of December 31, 2000, our
interest rate swap and collar agreements expire in varying amounts through 2002.

          The fair market value of our long-term debt approximates its carrying
value as it bears interest at floating rates of interest and current fair market
value of the senior notes approximates par value. As of December 31, 2000, the
estimated fair value of our interest rate swap and collar agreements was
approximately $(1.9) million, which amount represents the amount required to
enter into offsetting contracts with similar remaining maturities based on
quoted market prices.

          As of December 31, 2000, we had entered into interest rate swaps that
approximated $701.0 million, or 107.0%, of our borrowings under all of our
credit facilities. A significant portion of such interest rate swaps were kept
in place as of December 31, 2000 in anticipation of a need to hedge additional
borrowings incurred in connection with our refinancing on January 5, 2001, the
effects of which are mentioned below. Accordingly, a hypothetical 100 basis
point increase in interest rates along the entire interest rate yield curve
would decrease our annual interest expense by approximately $460,000. These
statistics are not necessarily indicative of our current interest rate exposure,
as these facilities were replaced by the Midwest Holdings credit facility on
January 5, 2001 in connection with the AT&T transactions which resulted in an
increase in our outstanding borrowings.

       As of January 5, 2001, primary market risk exposures and methods for
managing such exposures had not changed. Additionally, the notional amount of
our interest rate swaps was also unchanged at approximately $701.0 million or
51% of our borrowings under all our credit facilities. Accordingly, a
hypothetical 100 basis point increase in interest rates along the entire
interest rate yield curve would increase our projected interest expense by
approximately $6.7 million for the year ending December 31, 2001.

Item 8.  Financial Statements and Supplementary Data

          Reference is made to pps. F-1 through F-32 comprising a portion of
this report.

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

          None.

                                       52



<PAGE>

                                   PART III


Item 10. Directors and Executive Officers of the Registrant

     Our current directors, executive officers and key employees are as follows:

<TABLE>
<CAPTION>
   Name                                        Age    Position
<S>                                            <C>    <C>
   Sidney R. Knafel......................      70     Chairman of the Board and Director
   Michael S. Willner....................      49     President, Chief Executive Officer and Director
   Kim D. Kelly..........................      44     Executive Vice President, Chief Operating and Financial
                                                      Officer and Director
   Thomas L. Kempner.....................      73     Director
   James S. Marcus.......................      71     Director
   Prakash A. Melwani....................      42     Director
   Daniel S. O'Connell...................      46     Director
   Elliot Brecher........................      36     Senior Vice President, General Counsel and Secretary
   Gregory Capranica ....................      43     Senior Vice President, Operations, Illinois Region
   E. Scott Cooley.......................      40     Senior Vice President, Employee Relations and Development
   Charles E. Dietz......................      53     Senior Vice President, Engineering
   Gregory B. Graff......................      40     Senior Vice President, Operations, Western Kentucky Region
   Pamela Euler Halling..................      53     Senior Vice President, Marketing and Programming
   Daniel Mannino........................      41     Senior Vice President and Controller
   Judy Poole............................      54     Senior Vice President, Human Resources
   Colleen Quinn.........................      48     Senior Vice President, Corporate Relations
   Mary E. Rhodes........................      51     Senior Vice President, Customer Service
   David Servies.........................      41     Senior Vice President, Operations, Indiana Region
   Matthew Siegel........................      38     Senior Vice President, Finance and Treasurer
   James A. Stewart......................      49     Senior Vice President, Operations, Eastern Kentucky and National Regions
</TABLE>

          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., IGENE Biotechnology,
Inc. and Source Media, 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
also a director of Source Media, Inc. and Commerce.TV. He is a member of the
National Cable Television Association's Board of Directors and Executive
Committee, serving as its Vice-Chairman. 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.

                                       53
<PAGE>

       Kim D. Kelly has been Executive Vice President and Chief Financial
Officer since 1990. Ms. Kelly has also been Chief Operating Officer since
January 1998. 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 serves as a member of the National Cable
Television Association Subcommittee for Telecommunications Policy, as well as
the National Cable Television Association Subcommittee for Accounting. She also
serves as a director of Bank of New York Hamilton Funds and Source Media, Inc.
and serves on the boards of Cable in the Classroom and Cable Advertising Bureau.
Ms. Kelly is a graduate of George Washington University.

       Thomas L. Kempner is a director and Chairman of the Compensation and
Stock Option Committees. He has been Chairman and Chief Executive Officer of
Loeb Partners Corporation, investment bankers, and its predecessors since
February 1978. He is currently a director of Alcide Corporation, CCC Information
Services Group, Inc., FuelCell Energy, Inc., IGENE Biotechnology, Inc.,
Intermagnetics General Corp., Northwest Airlines, Inc. (Emeritus), Evercel,
Inc., Roper Starch Worldwide, Inc. and Dyax Corporation. Mr. Kempner is a
graduate of Yale University.

       James S. Marcus is a director and member of the Audit Committee. He is a
retired partner of The Goldman Sachs Group, L.P. (predecessor of The Goldman
Sachs Group, Inc.), investment bankers. He is currently a director of American
Biltrite Inc. and Kellwood Company. Mr. Marcus is a graduate of Harvard College
and Harvard Business School.

       Prakash A. Melwani is a director and Chairman of the Audit Committee. He
is a managing director of Vestar Capital Partners, manager of over $3.5 billion
in private equity capital, and was a founding partner of Vestar at its inception
in 1988. Mr. Melwani has been designated as a director by Vestar pursuant to a
Securityholders Agreement between Vestar, Insight and other parties. Mr. Melwani
is a graduate of Cambridge University and Harvard Business School.

       Daniel S. O'Connell is a director and member of the Compensation, Audit
and Stock Option Committees. He was a founder in 1988 of Vestar. He is currently
the Chief Executive Officer of Vestar. Mr. O'Connell has been designated as a
director by Vestar pursuant to a Securityholders Agreement between Vestar,
Insight and other parties. Mr. O'Connell is a graduate of Brown University and
the Yale University School of Management.

       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.


       Gregory Capranica joined Insight in early 2001 as District Vice President
in Springfield, Illinois, and was quickly promoted to Senior Vice President,
Operations, Illinois Region. A 20-year veteran in various capacities of the
cable industry, Mr. Capranica was most recently General Manager for the Chicago
Suburbs division of AT&T Broadband. Prior to his tenure at AT&T Broadband, Mr.
Capranica held management level positions for Times Mirror Cable and Cox
Communications.

       E. Scott Cooley joined Insight in 1998 as Senior Vice President,
Operations with responsibility for Indiana cluster. In October 2000, he became
Senior Vice President, Employee Relations and Development of Insight. Formerly,
Mr. Cooley was an employee of TCI Communications for 18 years, having worked in
the areas of technical operations and purchasing and as general manager of the
Bloomington system.

       Charles E. Dietz joined as Senior Vice President, Engineering in 1996.
From 1973 to 1995, Mr. Dietz was employed by Vision Cable Communications serving
as Vice President of Technical Operations from 1988 through 1991, becoming Vice
President of Operations in 1991.




                                       54


<PAGE>




       Gregory B. Graff has served as Senior Vice President and General Manager
of Insight Ohio since its acquisition by Insight in August 1998. In June 2000,
he became the Senior Vice President, Operations, Western Kentucky Region.
Previously, Mr. Graff served as Senior Vice President, Marketing, Programming
and Advertising for Coaxial Communications of Central Ohio, Inc. from 1997 to
1999, Vice President, Marketing and Sales for Coaxial Communications from 1995
to 1997, and Director of Marketing for KBLCOM's Paragon Cable operation in San
Antonio, Texas. He began his cable television career in 1984 with Continental
Cablevision.

       Pamela Euler Halling joined as Vice President, Marketing in 1988 and has
since become Senior Vice President of Marketing and Programming. Prior to
joining Insight, she had served since 1985 as Director of Consumer Marketing for
the Disney Channel. Previously, she was Vice President of Affiliate Marketing
for Rainbow Programming Holdings, Inc. and a marketing consultant for TCI
Communications. She began her cable television career in 1973 with Continental
Cablevision.

       Daniel Mannino joined as Controller in 1989 and became Vice President and
Controller in 1991 and Senior Vice President in 1999. Previously, Mr. Mannino
was employed by Vision Cable from 1983 to 1989, becoming its Controller in 1986.
Mr. Mannino is a certified public accountant.

       Judy Poole joined in 1998 as Vice President, Human Resources and became
Senior Vice President, Human Resources in 1999. Prior to joining Insight, Ms.
Poole spent 13 years at Cablevision Systems, most recently as Corporate Director
of Employee Relations.

       Colleen Quinn joined as Senior Vice President, Corporate Relations in
1999. Prior to thereto, Ms. Quinn was the Senior Vice President, Government
Affairs, of the New York City Partnership and Chamber of Commerce from 1997 to
April 1999. She has also held positions at MacAndrews & Forbes Holdings, Inc.
and the Revlon Foundation as Vice President from 1996 to 1997 and at Pacific
Telesis Group as Executive Director and Director of Government Relations from
1993 to 1996.

       Mary E. Rhodes joined in 1986 and became Vice President, Customer Service
Administration in 1996 and Senior Vice President, Customer Service
Administration in 2000. Ms. Rhodes previously served as general manager of our
Jeffersonville, Indiana and Sandy, Utah cable systems.

       David Servies joined in 1990 and became Senior Vice President,
Operations, Indiana Region in October 2000. From 1998 to 2000, Mr. Servies
served as District Vice President for Northeast Indiana District. Mr. Servies
has worked in the cable industry for the past 21 years. Mr. Servies is a member
of the Indiana Cable Telecommunications Association and the National Cable
Television Association.

       Matthew Siegel joined in May 2000 as Senior Vice President, Finance and
Treasurer. From June 1991 until May 2000, Mr. Siegel was employed by The Seagram
Company Ltd., most recently as Assistant Treasurer. Mr. Siegel is a graduate of
The Graduate School of Business of The University of Chicago and has a B.S.
degree from the Wharton School at the University of Pennsylvania.

       James A. Stewart joined in 1987 as a Vice President, and now serves as
Senior Vice President, Operations, Eastern Kentucky and national regions.
Formerly, Mr. Stewart was Operations Manager for National Guardian Security
Services. He was also employed by Viacom International, Inc.'s cable television
division for eight years, where he ultimately became Vice President and General
Manager of Viacom Cablevision's Nashville, Tennessee system.

                                       55
<PAGE>

          All directors hold office until the next annual meeting of
stockholders and until their successors have been elected and qualify. All
executive officers serve at the discretion of the Board of Directors. We, Mr.
Knafel and parties related to Mr. Knafel, Mr. Willner, Ms. Kelly and members of
management listed above holding shares of Class B common stock have agreed to
cause the election of two directors designated by Vestar so long as Vestar
continues to own at least 25% of the common stock it owned upon closing of our
initial public offering, and one such director so long as Vestar continues to
own at least 15% of such common stock.

Committees of the Board of Directors

          Our Board of Directors has an audit committee, a compensation
committee and a stock option committee. The audit committee consists of three
directors, all of whom are independent directors. Its functions include the
following:

     .    recommend the appointment of independent auditors;

     .    review the arrangements for and scope of the audit by independent
          auditors;

     .    review the independence of the independent auditors;

     .    consider the adequacy and effectiveness of the system of internal
          accounting and financial controls and review any proposed corrective
          actions;

     .    review and monitor our policies regarding business ethics and
          conflicts of interest;

     .    discuss with management and the independent auditors our draft
          quarterly interim and annual financial statements and key accounting
          and reporting matters; and

     .    review the activities and recommendations of our accounting
          department.

          The compensation committee consists of three directors, two of whom
are independent directors. The compensation committee has authority to review
and make recommendations to the Board of Directors with respect to the
compensation of our executive officers.

          The stock option committee consists of two directors, each of whom is
a "non-employee" director. The stock option committee administers our 1999 stock
option plan and determines, among other things, the time or times at which
options will be granted, the recipients of grants, whether a grant will consist
of incentive stock options, nonqualified stock options or stock appreciation
rights (in tandem with an option or free-standing) or a combination thereof, the
option periods, whether an option is exercisable for Class A common stock or
Class B common stock, the limitations on option exercise and the number of
shares to be subject to such options, taking into account the nature and value
of services rendered and contributions made to our success. The stock option
committee also has authority to interpret the plan and, subject to certain
limitations, to amend provisions of the plan as it deems advisable.

Item 11. Executive Compensation

                                       56
<PAGE>

          The following table summarizes the compensation for services rendered
paid in 1998, 1999 and 2000 to the Chief Executive Officer and our other
executive officers (collectively, the "Named Executive Officers").

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                             Long-Term
                                            Annual Compensation         Compensation Awards
                                            -------------------         -------------------
                                                                      Restricted     Securities
                                                                        Stock        Underlying       All Other
            Name and                          Salary      Bonus        Awards         Options       Compensation
        Principal Position           Year      ($)         ($)         ($)(1)           (#)             ($)(2)
        ------------------           ----    -------    --------     ----------      ----------     ------------
<S>                                  <C>     <C>        <C>          <C>             <C>            <C>
Sidney R. Knafel                     2000    250,000         --           --              --               --
Chairman of the Board                1999    250,000         --           --         562,500            7,605
                                     1998    248,664         --           --              --            1,615

Michael S. Willner                   2000    500,000    150,000           --              --               --
President and Chief                  1999    500,000    100,000           --         843,750            5,538
Executive Officer                    1998    435,616     30,000           --              --            1,646

Kim D. Kelly                         2000    450,000    135,000           --              --               --
Executive Vice                       1999    450,000     90,000           --         843,750            6,417
President and Chief                  1998    386,927     25,000           --              --            3,828
Financial and
Operating Officer

Elliot Brecher(3)                    2000    275,000     55,000           --          50,000             --
Senior Vice President,
General Counsel
</TABLE>

_____________
(1)  All of the partners of Insight LP exchanged their partnership interests in
     Insight LP for shares of our common stock upon the closing of our initial
     public offering. At the same time, the general partner distributed to
     certain of our employees a number of shares of common stock representing
     their respective percentage equity interests in the general partner.
     Although certain of such shares representing equity interests in the
     general partner were reportable as income to the employees, the above table
     does not distinguish between such exchanged interests and the other
     interests in the general partner which were exchanged at the same time.

(2)  Amounts for 1999 and 2000 include: (i) contributions made by us on behalf
     of the Named Executive Officers to our 401(k) Plan (Sidney Knafel: $1,875
     and $2,125.20; Michael Willner: $1,667 and $4,250; and Kim Kelly: $3,750
     and $4,250) and (ii) life insurance premiums and group term life insurance
     premiums paid by us on behalf of the Named Executive Officers (Sidney
     Knafel: $5,730 and $15,474; Michael Willner: $3,871 and $4,056; and Kim
     Kelly: $2,667 and $2,733).

(3)  We have agreed to employ Mr. Brecher as Senior Vice President, General
     Counsel through December 31, 2002. Under the agreement, Mr. Brecher's
     annual base salary is $275,000, with discretionary annual increases, and an
     annual bonus based upon a percentage of base salary. The agreement provides
     for certain payments in the event of termination under certain
     circumstances.

       The following table sets forth information at fiscal year-end 2000
concerning stock options held by the Named Executive Officers in the Summary
Compensation Table. No options held by such individuals were exercised during
2000.

                                       57
<PAGE>

                         Fiscal Year-End Option Values

<TABLE>
<CAPTION>
                                             Number of Securities          Value of Unexercised
                                            Underlying Unexercised         In-the-Money Options
                                         Options At Fiscal Year-End(#)   At Fiscal Year-End($)(1)
                                         -----------------------------  --------------------------
Name                                      Exercisable   Unexercisable   Exercisable  Unexercisable
----                                      -----------   -------------   -----------  -------------
<S>                                      <C>            <C>             <C>          <C>
Sidney R. Knafel                            112,500         450,000            0              0

Michael S. Willner                          168,750         675,000            0              0

Kim D. Kelly                                168,750         675,000            0              0

Elliot Brecher                               10,000          40,000       11,250         45,000
</TABLE>

___________
(1)  The value of the unexercised options was calculated as the difference
     between the exercise price of the options and $23.50, the fair market value
     of our common stock as of December 31, 2000, multiplied by the number of
     options outstanding.

Compensation of Directors

          Those directors who are not also our employees receive an annual
retainer fee of $25,000, which may, at the election of the director, be in the
form of cash or five-year stock options to purchase our Class A common stock.
Non-employee directors also receive reimbursement of out-of-pocket expenses
incurred for each Board or committee meeting attended.

1999 Stock Option Plan

          The Board of Directors adopted the Insight Communications Company,
Inc. 1999 Stock Option Plan as of June 24, 1999. We reserved 5,000,000 shares of
common stock with respect to which options and stock appreciation rights
("SARs") may be granted under the Plan. The purpose of the Plan is to promote
the interests of Insight and its stockholders by strengthening our ability to
attract and retain competent employees, to make service on our Board of
Directors more attractive to present and prospective non-employee directors and
to provide a means to encourage stock ownership and proprietary interest in
Insight by officers, non-employee directors and valued employees and other
individuals upon whose judgment, initiative and efforts the financial growth of
Insight largely depends.

          The Plan may be administered by either the entire Board of Directors
or a committee consisting of two or more members of the Board of Directors, each
of whom is a "non-employee director" (as defined in Rule 16b-3 under the
Securities Exchange Act of 1934). The Plan is currently administered by a stock
option committee of the Board of Directors consisting of two non-employee
directors, Thomas L. Kempner and Daniel S. O'Connell.

          Incentive stock options ("ISOs") may be granted only to officers and
key employees of Insight and its subsidiaries. Nonqualified stock options and
SARs may be granted to such officers and employees as well as to our agents,
directors and consultants. In determining the eligibility of an individual for
grants under the Plan, as well as in determining the number of shares to be
optioned to any individual, the stock option committee takes into account the
recommendations of our Chairman of the Board, Sidney R. Knafel, the position and
responsibilities of the individual being considered, the nature and value to
Insight or its subsidiaries of his or her service or accomplishments, his or her
present or potential contribution to the success of Insight or its subsidiaries,
the number and terms of options and SARs already held by an

                                       58
<PAGE>

individual and such other factors as the stock option committee may deem
relevant. In making recommendations to the stock option committee, Mr. Knafel
focuses upon individuals who would be motivated by a direct economic stake in
the equity of Insight. Options may provide for their exercise into shares of any
class of our common stock, Class A or Class B. Under an agreement with Vestar,
we have agreed not to grant options for Class B common stock representing in
excess of 6% of the fully-diluted shares.

       The Plan provides for the granting of ISOs to purchase common stock at
not less than the fair market value on the date of the option grant and the
granting of nonqualified options and SARs with any exercise price. SARs granted
in tandem with an option have the same exercise price as the related option. The
Plan contains limitations applicable only to ISOs granted thereunder. To the
extent that the aggregate fair market value, as of the date of grant, of the
shares to which ISOs become exercisable for the first time by an optionee during
the calendar year exceeds $100,000, the option will be treated as a nonqualified
option. In addition, if an optionee owns more than 10% of the total voting power
of all classes of Insight's capital stock at the time the individual is granted
an ISO, the option price per share cannot be less than 110% of the fair market
value per share and the term of the ISO cannot exceed five years. No option or
SAR may be granted under the Plan after June 25, 2009, and no option or SAR may
be outstanding for more than ten years after its grant.

       Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash, check or, under certain
circumstances, in shares of any class of our common stock, or any combination
thereof. SARs, which give the holder the privilege of surrendering such rights
for the appreciation in the common stock between the time of the grant and the
surrender, may be settled, in the discretion of the Board or committee, as the
case may be, in cash, common stock, or in any combination thereof. The exercise
of an SAR granted in tandem with an option cancels the option to which it
relates with respect to the same number of shares as to which the SAR was
exercised. The exercise of an option cancels any related SAR with respect to the
same number of shares as to which the option was exercised. Generally, options
and SARs may be exercised while the recipient is performing services for Insight
and within three months after termination of such services.

       The Plan may be terminated at any time by the Board of Directors, which
may also amend the Plan, except that without stockholder approval, it may not
increase the number of shares subject to the Plan or change the class of persons
eligible to receive options under the Plan.

401(k) Plan

       We maintain a 401(k) retirement plan established in conformity with
Section 401(k) of the Internal Revenue Code of 1986 covering all of our eligible
employees. Pursuant to the 401(k) plan, employees may elect to defer up to 15%
of their current pre-tax compensation and have the amount of such deferral
contributed to the 401(k) Plan. The maximum elective deferral contribution was
$10,500 in 2000, subject to adjustment for cost-of-living in subsequent years.
Certain highly compensated employees may be subject to a lesser limit on their
maximum elective deferral contribution.  The 401(k) plan permits, but does not
require, matching contributions and non-matching (profit sharing) contributions
to be made by us up to a maximum dollar amount or maximum percentage of
participant contributions, as determined annually by us. We match employee
contributions on a quarterly basis in an amount equal to 100% of an employee's
contribution for the quarter, but not exceeding 5% of the employee's pre-tax
compensation for the quarter. The 401(k) plan provides that half of our matching
contribution is made in the form of our Class A common stock and the other half
is made in cash. The stock is contributed after each calendar quarter with
respect to such quarter based upon the closing price as of the last day of such
quarter. The 401(k) plan applies a three-year vesting schedule to all of our
matching contributions, which commences on the employees' first employment date
and

                                       59
<PAGE>

expires on the employees' third anniversary date. The 401(k) plan is qualified
under Section 401 of the Internal Revenue Code so that contributions by
employees and employer, if any, to the 401(k) plan, and income earned on plan
contributions, are not taxable to employees until withdrawn from the 401(k)
plan, and so that contributions by us, if any, will be deductible by us when
made.

Compensation Committee Interlocks and Insider Participation

          Currently, the members of the compensation committee are Thomas L.
Kempner, Daniel S. O'Connell and Michael S. Willner, our President and Chief
Executive Officer.

Item 12. Security Ownership of Certain Beneficial Owners and Management

          The following table sets forth information as of March 28, 2001 with
respect to the beneficial ownership of our common stock by:

     .    each person who is known by us to beneficially own more than 5% of our
          common stock;

     .    each of our directors; and

     .    all directors and executive officers as a group.

          Unless otherwise indicated, the address of each person named in the
table below is Insight Communications Company, Inc., 810 Seventh Avenue, New
York, New York 10019. The amounts and percentage of common stock beneficially
owned are reported on the basis of regulations of the SEC governing the
determination of beneficial ownership of securities. Under the rules of the SEC,
a person is deemed to be a "beneficial owner" of a security if that person has
or shares "voting power," which includes the power to vote or to direct the
voting of such security, or "investment power," which includes the power to
dispose of or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has a
right to acquire beneficial ownership within 60 days. Under these rules, more
than one person may be deemed a beneficial owner of the same securities and a
person may be deemed to be a beneficial owner of securities as to which such
person has no economic interest.

                                       60
<PAGE>

<TABLE>
<CAPTION>
                                                                                                         Percent of
                                                              Class A                 Class B            Vote as a
                                                           Common Stock             Common Stock          Single
                                                           ------------             ------------
Beneficial Owner                                        Number         %         Number         %         Class(1)
----------------                                        ------        ---        ------        ---        --------
<S>                                                   <C>             <C>        <C>           <C>        <C>
Sidney R. Knafel(2)(3)...........................             --        --       4,009,932     38.8         26.2
Michael S. Willner(3)(4).........................             --        --       1,650,264     15.9         10.7
Kim D. Kelly(3)(5)...............................             --        --       1,007,170      9.7          6.5
Thomas L. Kempner(6).............................      1,140,358       2.3              --       --            *
James S. Marcus..................................             --        --         132,779      1.3            *
Prakash A. Melwani(7)............................      9,921,723      19.9              --       --          6.5
Daniel S. O'Connell(7)...........................      9,921,723      19.9              --       --          6.5
Vestar Capital Partners III, L.P.(7).............      9,921,723      19.9              --       --          6.5
Andrew G. Knafel, Joshua Rubenstein
  and William L. Scherlis, as trustees
  under Trusts F/B/O Knafel
  children(8)....................................         45,369         *       3,354,737     32.8         22.0
Franklin Resources, Inc.
  and affiliates(9)
  777 Mariners Island Blvd.
  San Mateo, CA 94403............................      4,038,891       8.1              --       --          2.7
Westport Asset Management, Inc.
  and affiliates(10)
  253 Riverside Avenue
  Westport, CT 06880.............................      3,023,200       6.0              --       --          2.0
Wallace R. Weitz & Company
  and affiliates(11)
  1125 South 103/rd/ St., Suite 600
  Omaha, Nebraska 68124..........................      3,249,435       6.5              --       --          2.1
All directors and executive officers
  as a group (8 persons)(3)(12)..................     11,093,481      22.2       6,800,145     63.7         50.5
</TABLE>

_____________
*    Less than 1%.

(1)  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.
     Holders of both classes of common stock vote together as a single class on
     all matters presented for a vote, except as otherwise required by law.

(2)  Includes 3,471,477 shares held by ICI Communications, Inc., of which Mr.
     Knafel is the sole stockholder, and 425,955 shares held by the estate of
     Mr. Knafel's deceased wife. Also includes 112,500 shares issuable upon the
     exercise of options granted pursuant to the Plan.

(3)  Does not include those shares issuable upon the exercise of options granted
     pursuant to the Plan which are not exercisable within 60 days.

(4)  Includes 6,448 shares of Class B common stock held in trust for the benefit
     of his minor children. Also includes 168,750 shares issuable upon the
     exercise of options granted pursuant to the Plan.

(5)  Includes 168,750 shares issuable upon the exercise of options granted
     pursuant to the Plan.

(6)  Represents 601,694 shares held by Loeb Investors Co. LIX and 538,664 shares
     held by Loeb Investors Co. XXXVI, each of which may be deemed beneficially
     owned by Mr. Kempner. Loeb Investor Co.'s address is 61 Broadway, New York,
     New York.

(7)  Each of Mr. Melwani, a managing director of Vestar, and Mr. O'Connell, the
     Chief Executive Officer of Vestar, may be deemed to beneficially own the
     shares held by Vestar. Vestar's address is 245 Park Avenue, 41st floor,

                                       61
<PAGE>

     New York, New York 10167.

(8)  Includes 386,413 shares of Class B common stock held individually by Andrew
     G. Knafel and 45,369 shares of Class A common stock held individually by
     William L. Scherlis. Sidney Knafel expressly disclaims beneficial ownership
     of the shares.

(9)  Represents shares beneficially owned by Franklin Advisers, Inc. and
     Franklin Management, Inc., subsidiaries of Franklin Resources, Inc., as
     reported in a Schedule 13G filed in February 2001. Such report also
     includes individual reporting persons who control Franklin Resources. All
     of such reporting persons disclaim beneficial ownership of such shares.

(10) Represents shares beneficially owned by Westport Asset Management, Inc., as
     reported in a Schedule 13G filed in February 2001. Such report also
     includes Westport Advisers, LLC, an investment advisor of which it owns
     50%. All of such reporting persons disclaim beneficial ownership of such
     shares.

(11) Represents shares beneficially owned by Wallace R. Weitz & Company, as
     reported in a Schedule 13G filed in February 2001. Such report also
     includes an individual reporting person who controls Wallace R. Weitz &
     Company. All of such reporting persons disclaim beneficial ownership of
     such shares.

(12) Includes shares issuable upon the exercise of options granted pursuant to
     the Plan.

Item 13.  Certain Relationships and Related Transactions

     On November 17, 1999, Insight Interactive, LLC, our wholly-owned
subsidiary, formed a joint venture with Source Media, Inc. known as SourceSuite,
LLC to conduct all lines of business of Source Media relating to its
VirtualModem and Interactive Channel products and businesses. We capitalized the
joint venture with $13.0 million in exchange for our 50% equity interest. As
part of the transaction, Insight Interactive acquired 842,105 shares of Source
Media's common stock for $12.0 million and warrants to purchase up to an
additional 4,596,786 shares at an exercise price of $20 per share.

       Insight Interactive also received a share of non-participating
preferred stock of Source Media, which provides us with the right to designate
three members of the board of directors of Source Media. The designees are
Sidney R. Knafel, our Chairman of the Board, Michael S. Willner, our President
and Chief Executive Officer, and Kim D. Kelly, our Executive Vice President,
Chief Operating and Financial Officer.

       We are currently providing the joint venture's interactive services to
customers of our systems under a letter of intent entered into on July 29, 1998.
Pursuant to the letter of intent, we pay a monthly license fee for the right to
distribute LocalSource in an amount that is based on the number of digital
customers as adjusted for penetration. We and Source Media share 50% of all
revenues, other than advertising revenues, generated by LocalSource.

       On March 3, 2000, the joint venture's VirtualModem business was sold to
Liberate Technologies in exchange for the issuance to each of Insight
Interactive and Source Media of 886,000 shares of Liberate common stock. Our
joint venture with Source Media continues to own and operate its programming
assets, LocalSource and SourceGuide, and has entered into preferred content and
programming services agreements with Liberate.

       In connection with our initial public offering, we issued a total of
1,412,181 shares of common stock to our employees, including executive officers
and directors. In October 1999 and April 2000, we made

                                       62
<PAGE>

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. Eleven of our employees have such loans, with average outstanding
principal balances of approximately $1.3 million. Each of the non-recourse loans
are represented by notes which contain indentical terms and are secured by the
shares of common stock received by the individuals. The loans mature on October
1, 2004 and bear interest at the rate of 5.07% per annum, with accrued interest
payable on October 1 of each year, commencing October 1, 2001. The loans,
including accrued interest, are payable by employees 180 days following the
termination of their employment. On March 8, 2001, the Board of Directors
adopted a program designed to reduce the impact of the tax withholding
obligations of these employees. Under this program, we may forgive the accrued
interest due from an employee on each interest payment date provided such
employee continues to be employed in good standing on such date, with an
additional payment to cover the income taxes due as a result of the forgiveness
and such additional payment. The employee would be required to pay us an amount
equal to any benefit realized by claiming a deduction for any forgiven interest.
The proceeds of any sales of the pledged shares must be applied towards early
prepayment of the loans, with the exception of certain "qualifying sales" and
sales by an employee which would not result in the value of such employee's
pledged shares being reduced to less than 200% of the principal amount of the
employee's note. The program contemplates two categories of "qualified sales": a
taxable transaction and a tax-free reorganization. If an employee's pledged
shares are sold in a qualifying taxable sale, we will forgive all accrued
interest and a portion of the loan so that the employee will only repay an
amount that is equal to the excess of the tax the employee would have paid in
the transaction had the amount received for the shares been treated as long-term
capital gain where the employee held the shares at a zero basis (i.e., as if the
employee had not been taxed upon initial receipt of the shares) over the amount
of tax actually paid by the employee in connection with the transaction.
Alternatively, if the employee's pledged shares are exchanged for other shares
in a qualifying tax-free transaction, we will forgive all accrued interest and a
portion of the loan equal to the amount by which the principal exceeds one-half
of the amount of tax the employee would have had to pay had the transaction been
a taxable sale and the employee held the shares at a zero basis. In each case,
we will make an additional payment to the employee to cover the income taxes due
as a result of the forgiveness and such additional payment. If an employee dies
or becomes permanently disabled or is terminated other than for cause on, or
within one year after, certain specified "change in control" transactions, we
will forgive all principal and accrued interest on the loan, with an additional
payment to cover the income taxes due as a result of the forgiveness and such
additional payment.

          On August 8, 2000, Insight Ohio purchased its non-voting common equity
interest held by Coaxial Communications of Central Ohio, Inc. for 800,000 shares
of our Class A common stock plus $2.6 million in cash. In connection with the
purchase, Insight Ohio's operating agreement was amended to, among other things,
(i) remove certain special rights of the principals of Coaxial Communications'
shareholders (the "Coaxial Entities"), (ii) vest in the common equity interests
of Insight Ohio 70% of its total voting power and in the preferred equity
interests of Insight Ohio 30% of its total voting power and (iii) make Insight
LP the manager. Coaxial Communications retained its preferred interests in
Insight Ohio and we became the sole owner of the common equity interests of
Insight Ohio.

          We also agreed that if the Coaxial 10% senior notes or the Coaxial
12 7/8% senior discount notes are repaid or modified, or at any time after
August 15, 2008, the principals of the Coaxial Entities may require us to
purchase their interests in the Coaxial Entities for $32.6 million, with credit
given toward that amount for the value at such time of the 800,000 shares
described above. The amount due to the principals of the Coaxial Entities will
be payable, at our option, in cash or in additional shares of our Class A common
stock.

  Insight Midwest Partnership Agreement

                                       63
<PAGE>

       At any time after December 31, 2005 (other than at certain times
specified in the Insight Midwest partnership agreement), either AT&T Broadband
or Insight LP (the "Initiating Partner") will have the right to commence the
split-up process described below by delivering a notice to the other partner
(the "Non-Initiating Partner"). The Non-Initiating Partner will have the right
to postpone the split-up process one time only for a period of six months,
subject to certain restrictions in our partnership agreement.

       The Initiating Partner will be required to divide the assets and
liabilities of Insight Midwest into two groups of as nearly equal gross fair
market values as possible, such that certain specified systems cannot be divided
between the two groups and the net fair market values (i.e., taking liabilities
into account) of the two groups are equal. The Non-Initiating Partner will have
the right to select which of the two asset groups it desires to acquire from
Insight Midwest in redemption of its ownership interest, provided that if the
Non-Initiating Partner does not agree that the Initiating Partner's division of
Insight Midwest's assets and liabilities complies with the requirements of the
Insight Midwest partnership agreement, it will have the right to propose its own
division of Insight Midwest's assets and liabilities. If the Non-Initiating
Partner proposes its own division of asset groups and the partners cannot agree
on two asset groups within ninety days, the partners will engage a mutually
satisfactory investment banking firm or appraisal firm to select which partner's
division of Insight Midwest assets and liabilities most closely complies with
the requirements of Insight Midwest's partnership agreement. The partner whose
asset group division is not selected by the firm will have the right to select
which of the two asset groups designated by the other partner it desires to
acquire from Insight Midwest in redemption of its ownership interest.

       If the partners become obligated to consummate the split-up process in
accordance with Insight Midwest's partnership agreement and either partner
defaults in its obligation, then the non-defaulting partner will have the right
to cause Insight Midwest to be liquidated and dissolved in accordance with the
liquidation provisions of Insight Midwest's partnership agreement or to
terminate the split-up process and continue Insight Midwest's partnership.

                                       64
<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

<TABLE>
<CAPTION>
                                                          Page
                                                          ----
<S>                                                       <C>
Report of Independent Auditors                            F-1

Insight Communications Company, Inc.
   Consolidated Balance Sheets as of
   December 31, 2000 and 1999                             F-2

Insight Communications Company, Inc.
   Consolidated Statements of Operations
   for the years ended December 31, 2000,
   1999 and 1998                                          F-3

Insight Communications Company, Inc.
   Consolidated Statements of Changes
   In Partners' Deficiency/Stockholders'
   Equity for the years ended December 31,
   2000, 1999 and 1998                                    F-4

Insight Communications Company, Inc.
   Consolidated Statements of Cash Flows
   for the years ended December 31, 2000,
   1999 and 1998                                          F-5

Insight Communications Company, Inc.
   Notes to Consolidated Financial
   Statements                                             F-6
</TABLE>

          (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, 2000.

                                       65
<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*
  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.*
  10.6    Amended and Restated Limited Partnership Agreement of Insight Kentucky
             Partners II, L.P., dated as of October 1, 1999*
  10.7    First Amendment to Amended and Restated Limited Partnership Agreement
             of Insight

                                       66
<PAGE>


             Kentucky Partners II, L.P., dated as of January 5, 2001*
  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)
  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 9 3/4% senior notes of Insight Midwest,
             L.P. and Insight Capital, Inc., dated as of October 1, 1999 (6)
 10.12    Indenture relating to 10 1/2 senior notes of Insight Midwest,
             L.P. and Insight Capital, Inc., dated as of November 6, 2000*
 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*
 10.16    Securityholders 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)
 10.17    Amendment, dated July 16, 1999 to the Letter Agreement (1)
 10.18    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)
 10.19    Amended and Restated Consulting Agreement, dated as of March 17,
             2000, by and between InterMedia Partners Southeast and Insight
             Communications Company, L.P. (5)
 10.20    Employment Agreement of Elliot Brecher
  21.1    Subsidiaries of the Registrant*

  23.1    Consent of Ernst & Young LLP
__________________
(1)  Filed as an exhibit to the 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.
(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.

*    Previously filed with this Form 10-K


                                      67
<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: May 25, 2001            By:/s/ Michael S. Willner
                                 -----------------------------------
                                 Michael S. Willner, President and
                                 Chief Executive Officer




<PAGE>


                                 Insight Inc.
                                 ------------

                        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, 2000 and 1999,
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, 2000. 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, 2000 and 1999, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States.

                                        /s/ Ernst & Young LLP

New York, New York
March 12, 2001

                                      F-1
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                                 December 31,
                                                                                            2000               1999
                                                                                        -----------------------------
<S>                                                                                     <C>                <C>
Assets
Cash and cash equivalents                                                               $   33,733         $  113,511
Investments                                                                                 27,846             21,650
Trade accounts receivable, net of allowance for doubtful accounts of $1,326 and
   $764 as of December 31, 2000 and 1999                                                    18,169             12,104
Launch funds receivable                                                                     16,123              4,434
Prepaid expenses and other assets                                                           12,178             13,094
                                                                                        -----------------------------
   Total current assets                                                                    108,049            164,793

Fixed assets, net                                                                          820,888            643,138
Intangible assets, net                                                                   1,270,632          1,140,374
Deferred financing costs, net of accumulated amortization of $3,537 and
      $1,262 as of December 31, 2000 and 1999                                               28,165             20,111
Investment in unconsolidated affiliates                                                      2,172              5,991
Officer and employee loans receivable                                                       14,680             13,900
Launch funds receivable                                                                         --              1,163
                                                                                        -----------------------------
   Total assets                                                                         $2,244,586         $1,989,470
                                                                                        =============================

Liabilities and stockholders' equity
Accounts payable                                                                        $   46,158         $   46,714
Accrued expenses and other liabilities                                                      12,191              9,431
Accrued property taxes                                                                      11,698             12,620
Accrued programming costs                                                                   23,527             21,282
Deferred revenue                                                                             4,069              1,748
Interest payable                                                                            20,705             19,415
Preferred interest distribution payable                                                      5,250                 --
                                                                                        -----------------------------
   Total current liabilities                                                               123,598            111,210

Deferred revenue                                                                            14,605              5,539
Deferred income taxes                                                                       60,824             33,529
Preferred interests                                                                        180,281                 --
Debt                                                                                     1,372,523          1,233,000

Minority interest                                                                          (47,925)            18,132

Stockholders' equity:
Preferred stock; $.01 par value; 100,000,000 shares authorized; no shares
   issued and outstanding as of December 31, 2000 and 1999                                      --                 --
Common stock; $.01 par value:
   Class A - 300,000,000 shares authorized; 49,957,180 and 49,157,180 shares
     issued and outstanding as of December 31, 2000 and 1999                                   500                492
   Class B - 100,000,000 shares authorized; 10,226,050 shares issued and
     outstanding as of December 31, 2000 and 1999                                              102                102
Additional paid in capital                                                                 655,253            656,486
Accumulated deficit                                                                       (115,175)           (72,188)
Accumulated other comprehensive income                                                          --              3,168
                                                                                        -----------------------------
   Total stockholders' equity                                                              540,680            588,060
                                                                                        -----------------------------
   Total liabilities and stockholders' equity                                           $2,244,586         $1,989,470
                                                                                        =============================
</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,
                                                                        2000        1999        1998
                                                                     ---------------------------------
<S>                                                                  <C>         <C>         <C>
Revenue                                                              $ 476,186    $242,693    $112,902

Operating costs and expenses:
  Programming and other operating costs                                167,163      71,956      30,376
  Selling, general and administrative                                   94,922      55,198      24,471
  Non-cash compensation and related charges                                 --      19,285          --
  Depreciation and amortization                                        236,242     131,308      43,849
                                                                     ---------------------------------
Total operating costs and expenses                                     498,327     277,747      98,696
                                                                     ---------------------------------

Operating income (loss)                                                (22,141)    (35,054)     14,206

Other income (expense):
  Gain (loss) on cable systems exchange                                   (956)     15,799     111,746
  Gain on contribution of cable systems to joint venture                    --          --      44,312
  Interest expense                                                    (115,524)    (57,053)    (31,817)
  Interest income                                                        5,771       6,655       3,711
  Other                                                                   (294)       (345)       (444)
                                                                     ---------------------------------
Total other income (expense)                                          (111,003)    (34,944)    127,508

Income (loss) before minority interest and equity in losses of
  investees                                                           (133,144)    (69,998)    141,714

Minority interest                                                       67,773      31,339       3,410
Equity in losses of investees                                           (3,830)    (13,963)     (3,251)
Gain on sale of equity investment                                       80,943          --          --
Impairment of investments                                              (88,554)         --          --
                                                                     ---------------------------------
Income (loss) before income taxes and extraordinary item               (76,812)    (52,622)    141,873
Provision (benefit) for income taxes                                   (33,825)     31,586          --
                                                                     ---------------------------------
Income (loss) before extraordinary item                                (42,987)    (84,208)    141,873
Extraordinary loss from early extinguishment of debt                        --          --      (3,267)
                                                                     ---------------------------------
Net income (loss)                                                      (42,987)    (84,208)    138,606
Accrual of preferred interests                                         (18,725)         --          --
Accretion of redeemable Class B common units                                --      (7,118)     (5,729)
                                                                     ---------------------------------
Net income (loss) applicable to common stockholders                  $ (61,712)   $(91,326)   $132,877
                                                                     =================================

Basic income (loss) per share before extraordinary item              $   (1.03)   $  (2.58)   $   6.71
Diluted income (loss) per share before extraordinary item            $   (1.03)   $  (2.58)   $   4.55
Basic income (loss) per share                                        $   (1.03)   $  (2.58)   $   6.55
Diluted income (loss) per share                                      $   (1.03)   $  (2.58)   $   4.61

See accompanying notes.
</TABLE>
                                      F-3
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
               CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS'
                        DEFICIENCY/STOCKHOLDERS' EQUITY
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                                           Additional                      Other
                                      General      Limited       Common      Paid in      Accumulated   Comprehensive
                                      Partner      Partners      Stock       Capital        Deficit        Income          Total
                                      -------      -------       -----       -------        -------        ------          ------
<S>                                    <C>          <C>          <C>       <C>            <C>           <C>              <C>
Balance at January 1, 1998            $(1,728)     $(126,254)                                                            $(127,982)

  Net income                            1,386        137,220                                                               138,606
  Accretion of redeemable Class
     B units                              (57)        (5,672)                                                               (5,729)
  Purchase of limited partner's
     units                               (165)       (16,321)                                                              (16,486)
  Warrants exercised                       24          2,363                                                                 2,387
  Warrants expired                          9            900                                                                   909
  Purchase of warrants                      4            363                                                                   367
                                      --------------------------------------------------------------------------------------------
Balance at December 31, 1998             (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 interest                                              (18,725)                                      (18,725)
                                      --------------------------------------------------------------------------------------------
Balance at December 31, 2000          $    --      $      --     $ 602     $ 655,253        $(115,175)     $    --       $ 540,680
                                      ============================================================================================
</TABLE>

See accompanying notes.

                                      F-4
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                           Year ended December 31,
Operating activities:                                                           2000                1999                1998
                                                                             -------------------------------------------------
<S>                                                                          <C>                 <C>                 <C>
 Net income (loss)                                                           $ (42,987)          $ (84,208)          $ 138,606
 Adjustments to reconcile net loss to net cash provided
 by operating activities:
    Depreciation and amortization                                              236,242             131,308              43,849
    Non-cash compensation                                                           --              18,715                  --
    Equity in losses of investees                                                3,830              13,963               3,251
    Gain on cable systems exchange                                                  --             (15,799)           (111,746)
    Gain on contribution of cable systems to joint venture                          --                  --             (44,312)
    Gain on sale of equity investment                                          (80,943)                 --                  --
    Impairment of investments                                                   88,554                  --                  --
    Extraordinary loss from early extinguishment of debt                            --                  --               3,267
    Minority interest                                                          (67,774)            (31,339)             (3,410)
    Provision for losses on trade accounts receivable                            8,655               3,038               1,288
    Amortization of bond discount                                                 (722)                 --                  --
    Deferred income taxes                                                      (33,825)             31,328                  --
    Other non-cash items                                                            --                (149)                 --
    Changes in operating assets and liabilities, net of the effect of
    acquisitions:
       Trade accounts receivable                                               (14,012)              7,225              (7,545)
       Launch fund receivable                                                   (9,052)             (5,597)                 --
       Prepaid expenses and other assets                                         2,111             (19,187)              1,707
       Accounts payable                                                         (7,409)             11,922              17,774
       Accrued expenses and other liabilities                                    8,964              35,228               2,031
                                                                             -------------------------------------------------
 Net cash provided by operating activities                                      91,632              96,448              44,760
                                                                             -------------------------------------------------
Investing activities:
 Purchase of fixed assets                                                     (262,241)           (135,929)            (44,794)
 Purchase of intangible assets                                                  (3,978)             (9,209)             (3,295)
 Purchase of cable television systems, net of cash acquired                     (1,718)           (342,012)            (84,101)
 Investment in equity investees                                                     --             (13,205)            (10,000)
 Purchase of investments                                                       (11,873)            (16,132)                 --
                                                                             -------------------------------------------------
 Net cash used in investing activities                                        (279,810)           (516,487)           (142,190)
                                                                             -------------------------------------------------
Financing activities:
 Net proceeds from initial public offering                                          --             606,994                  --
 Net proceeds from issuance of senior notes                                    492,500             200,000                  --
 Proceeds from borrowings under credit facilities                              124,400              22,000             753,900
 Repayment of amounts due to Tele-Communications, Inc.                              --                  --            (214,532)
 Repayment of credit facilities                                               (488,500)           (307,634)           (387,725)
 Distributions of preferred interests                                          (14,000)                 --                  --
 Purchase of warrants                                                               --                  --                 116
 Issuance of Class B Common units                                                   --                  --              50,000
 Class B Common unit issuance costs                                                 --                  --              (4,410)
 Purchase of redeemable preferred limited units                                     --                  --             (60,000)
 Purchase of limited partners' interest                                             --                  --             (16,486)
 Debt issuance costs                                                            (6,000)             (7,712)             (4,613)
                                                                             -------------------------------------------------
 Net cash provided by financing activities                                     108,400             513,648             116,250
                                                                             -------------------------------------------------
Net increase in cash and cash equivalents                                      (79,778)             93,609              18,820
Cash and cash equivalents, beginning of year                                   113,511              19,902               1,082
                                                                             -------------------------------------------------
Cash and cash equivalents, end of year                                       $  33,733           $ 113,511           $  19,902
                                                                             =================================================
Supplemental disclosure of cash flow information:
Cash paid for interest                                                       $ 117,100           $  45,299           $  21,834
Cash paid for income taxes                                                         657                 104                  10

Supplemental disclosure of non-cash investing activities:
Common stock issued in connection with acquisition                           $  17,500           $      --           $      --
</TABLE>

See accompanying notes

                                      F-5
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A. 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
Kentucky cable television systems (Note D).  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 (Note K).

We own and operate cable television systems in Kentucky, Indiana, Illinois,
Ohio, California and Georgia, as described below.  The accompanying consolidated
financial statements include our accounts and those of our wholly-owned
subsidiaries, Insight Communications Company, L.P. ("Insight LP") and Insight
Interactive LLC ("Insight Interactive").

Insight LP owns and operates cable television systems in Illinois, Indiana,
California and Georgia.  Through its wholly-owned subsidiary, Insight Holdings
of Ohio, LLC, Insight LP owns Insight Communications of Central Ohio, LLC
("Insight Ohio"), which operates cable television systems in the Columbus, Ohio
area (Note E).  In addition, Insight LP owns a 50% interest in Insight Midwest,
L.P. ("Insight Midwest"), which through its wholly-owned subsidiaries, Insight
Communications Midwest, LLC ("Insight Indiana") and Insight Communications of
Kentucky, L.P. ("Insight Kentucky") owns and operates cable television systems
in Indiana and Kentucky (Note D). Insight LP is the general partner and manager
of Insight Midwest and effectively controls all operating and financial
decisions.  Therefore, the accompanying consolidated financial statements
include the accounts of Insight Midwest.

Our other wholly-owned subsidiary, Insight Interactive owns a 50% equity
interest in SourceSuite LLC (Note G), which is accounted for under the equity
method of accounting.

B. 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 ("AT&T Broadband"). The partnership agreement of Insight Midwest states that
Insight LP is the general partner of Insight Midwest and effectively controls
its board, including all of the operating and financial decisions pertaining to
Insight Midwest. Accordingly, the results of Insight Midwest are included in the
consolidated financial statements. The minority interest represents AT&T
Broadband's 50% ownership interest in Insight Midwest. Intercompany balances and
transactions have been eliminated in consolidation.

                                      F-6
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

B. Significant Accounting Policies (continued)

Revenue Recognition

Revenue includes service, connection and launch fees. Service fees are recorded
in the month the cable television and pay television services are provided to
subscribers. Connection fees are charged for the hook-up of new customers and
are recognized as current revenues.  Launch fees are deferred and amortized over
the period of the underlying contract.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires us to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.

Cash Equivalents

We consider all highly liquid investments with a maturity of three months or
less when purchased to be cash equivalents.

Investments

Investments consist of debt and equity securities (Note G).  All investments are
classified as available-for-sale under Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS No. 115").  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.

Fixed Assets

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

                                      F-7
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

B. Significant Accounting Policies (continued)

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 material impairment of fixed
assets existed at December 31, 2000 or 1999.

Effective January 1, 2000, we changed the estimated useful lives of fixed assets
which related 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 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, 2000, 1999 and 1998 was
$135.9 million, $64.8 million and $21.6 million.

Intangible Assets

Intangible assets consist of franchise costs and goodwill (Note I). Costs
incurred in negotiating and renewing franchise agreements are capitalized and
amortized over the life of the franchise. Franchise rights 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.

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 material
impairment of intangible assets existed at December 31, 2000 or 1999.

Deferred Financing Costs

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

                                      F-8
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

B. Significant Accounting Policies (continued)

Earnings Per Share

Earnings per share is calculated in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings Per Share." As a result of our IPO,
earnings per share is presented in the accompanying statements of operations as
if a conversion of securities from partnership units to common shares occurred
at the beginning of all periods presented.  Basic earnings per share is computed
using average shares outstanding during the period which includes the effect of
the new shares issued in connection with our IPO.

For the year ended December 31, 2000 and 1999, diluted earnings per share equals
basic earnings per share as we had generated net losses and the effect of an
assumed conversion of certain partnership units and certain warrants to common
shares as well as the assumed exercise of stock options would be anti-dilutive.

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 K).

Marketing and Promotional

Marketing and promotional costs are expensed as incurred.  Marketing and
promotional expense for the years ended December 31, 2000, 1999 and 1998 was
$13.8 million, $5.5 million and $702,000.

Allocation of Profits and Losses

Prior to the exchange of common stock for the outstanding partnership interests
of Insight LP, profits and losses were allocated between the partners for
financial reporting purposes based on cash distribution and liquidating
distribution preferences per the partnership agreement.  For the period from
January 1, 1999 to July 26, 1999 and for the year ended December 31, 1998,
losses were allocated 1% to the General Partner for its interest and 99% to the
limited partners.

                                      F-9
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

B. Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133, as amended by SFAS No.
137, is effective for us beginning January 1, 2001. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments embedded in other
contracts and for hedging activities. SFAS No. 133 will require us to recognize
all derivatives on the balance sheet at fair value. At December 31, 2000, our
derivative financial instruments include interest rate swap and collar
agreements, which we believe qualify as cash flow hedges, with a fair value of
($1.9) million. Changes in the fair value of derivative financial instruments
are either recognized in income or in shareholders' equity as a component of
comprehensive income depending on whether the derivative financial instruments
qualify for hedge accounting.

Reclassifications

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


C. Acquisitions and Gain on Cable System Exchanges

On January 22, 1998, Insight LP acquired a cable television system located in
Rockford, Illinois ("Rockford") for $97.0 million.  The purchase price was
allocated to the cable television assets acquired in relation to their fair
values as increases in property and equipment of $11.5 million and franchise
costs of $85.5 million.  Franchise costs, arising from the acquisition, are
being amortized over a period of 15 years. The results of operations of Rockford
have been included in the accompanying statements of operations since its
acquisition date.

Effective October 31, 1998, Insight LP exchanged its Sandy, Brigham City and
Vernal, Utah systems (the "Utah Systems") servicing approximately 56,200
subscribers with TCI of Indiana Holdings, LLC ("TCI") for their Jasper and
Evansville, Indiana systems servicing approximately 63,000 subscribers. This
transaction has been accounted for by Insight LP as a sale of the Utah Systems
and purchase of the Jasper and Evansville systems. Accordingly, the Evansville
and Jasper systems have been included in the accompanying consolidated balance
sheets at $125.0 million (fair value of the Utah Systems) and Insight LP
recognized a gain on the sale of the Utah Systems of $112.0 million which amount
represents the difference between the carrying value of the Utah Systems and
their fair value. The Evansville and Jasper systems' purchase price was
allocated to the cable television assets acquired as increases in property and
equipment of $24.0 million and franchise costs of $101.0 million.  Franchise
costs arising from the acquisition of the Evansville and Jasper systems are
being amortized over a period of 15 years.

                                      F-10
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

C. Acquisitions and Gain on Cable System Exchanges (continued)

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.  Furthermore, 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.  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 condensed 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, which amount 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
property and equipment 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 property and equipment of $2.3 million and franchise
costs of $8.6 million.


D. Insight Midwest

Insight Midwest was formed in September 1999 to serve as the holding company and
a financing vehicle for our cable television system joint venture with AT&T
Broadband.  Insight Midwest is owned 50% by Insight LP and 50% by AT&T
Broadband, through its indirect subsidiary TCI.  On October 1, 1999, certain
Indiana and Kentucky systems and operations were contributed to Insight Midwest,
as described below. Through two of its operating subsidiaries, Insight Indiana
and Insight Kentucky, Insight Midwest owns and operates cable television systems
in Indiana and Kentucky, which passed approximately 1.2 million homes and served
approximately 737,000 and 749,000 customers as of December 31, 2000 and 1999.

On January 5, 2001, Insight Midwest, completed a series of transactions with
Insight LP and certain subsidiaries of AT&T Corp. (the "AT&T Subsidiaries") for
the acquisition of additional cable television systems valued at approximately
$2.2 billion (the "AT&T Transactions"), inclusive of systems valued at
approximately $775.8 million, contributed by Insight LP. As a result of the AT&T
Transactions, Insight Midwest acquired all of

                                      F-11
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

D. Insight Midwest (continued)

Insight LP's wholly-owned systems serving approximately 280,000 customers,
including systems which Insight LP purchased from the AT&T Subsidiaries.  At the
same time, Insight Midwest acquired from the AT&T Subsidiaries systems serving
approximately 250,000 customers.  The purchase price will be allocated to the
cable television assets acquired in relation to their fair values as increases
in property and equipment and franchise costs.  The AT&T Transactions were
financed through a credit facility established on January 5, 2001, the Midwest
Holdings Credit Facility (Note J).

Both Insight LP and the AT&T Subsidiaries contributed their respective systems
to Insight Midwest subject to an amount of indebtedness so that Insight Midwest
remains equally owned by Insight LP and AT&T Broadband.  Insight LP continues to
serve as the general partner of Insight Midwest and manages and operates the
Insight Midwest systems.  As a result of the AT&T Transactions, Insight Midwest
currently owns and operates cable television systems in Indiana, Kentucky,
Illinois, Ohio and Georgia which pass approximately 2.1 million homes and serve
approximately 1.3 million customers.

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 will be allocated to the cable television assets acquired in
relation to their fair values as increases in property and equipment and
franchise costs.

Indiana Systems

On October 31, 1998, Insight LP and TCI 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 TCI on October 31, 1998 (Note C) and the Noblesville,
Jeffersonville and Lafayette systems already owned by Insight LP (the "Insight
Contributed Systems").

On October 1, 1999, as part of a joint venture restructuring, Insight Indiana
became a wholly-owned subsidiary of Insight Midwest.  In addition to managing
the day-to-day operations of the Indiana Systems, Insight LP is the general
partner and therefore effectively controls Insight Midwest and is responsible
for all of the operating and financial decisions pertaining to the Indiana
Systems. 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 TCI.

The historical carrying values of the Indiana Systems contributed by TCI 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

                                      F-12
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

D. Insight Midwest (continued)

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 (Note C)) was allocated to the cable
television assets contributed by TCI in relation to their fair values as
increases in property and equipment of $58.0 million and franchise costs of
$181.6 million.  Neither Insight LP nor TCI is contractually required to
contribute additional capital to Insight Midwest and, because Insight Midwest is
a limited partnership, neither Insight LP nor TCI is liable for the obligations
of Insight Indiana or the Indiana Systems.

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.

Similar to Insight Indiana, in addition to managing the day-to-day operations of
the Kentucky Systems, Insight LP controls all of the operating and financial
decisions pertaining to the Kentucky Systems. The Kentucky Systems and each of
the other Kentucky partnerships also have twelve-year terms through October 1,
2011, unless extended by Insight and TCI.

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-13
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

D. Insight Midwest (continued)

Managed Indiana Systems

On March 17, 2000, we entered into a two-year agreement with InterMedia Partners
Southeast, an affiliate of AT&T Broadband, to provide consulting services to
cable television systems acquired by AT&T Broadband.  As of December 31, 2000,
these systems served approximately 121,000 customers in the States of Indiana
and Kentucky. We earn an annual fee of 3% of gross revenues for providing such
consulting services.  For the year ended December 31, 2000, we recognized $1.2
million of management fees in connection with this agreement.

E. Insight Ohio

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 and Series B Preferred
Interest as security for $140.0 million of 10% Senior Notes due in 2006 issued
by Coaxial and an affiliate ("Senior Notes") and $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 ("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

                                      F-14
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

E. Insight Ohio (continued)

and 30% of Insight Ohio's total voting power into the Preferred Interests of
Insight Ohio.

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.

Prior to August 8, 2000, Insight LP, as manager of Insight Ohio, earned a
management fee from Insight Ohio equal to 3% of Insight Ohio's revenues.  For
the year ended December 31, 1999 and for the period from August 21, 1998 through
December 31, 1998, such management fees were $1.4 million and $500,000.

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, during 1999 and the
period from August 21, 1998 through December 31, 1998, 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 statements of operations for the years ended December 31, 1999 and
1998 include Insight LP's share of Insight Ohio's operating income (loss) and
the aforementioned amortization of deficiency in assets of $(4.6) million and
$100,000 and $8.6 million and $3.4 million.

                                      F-15
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


F. Pro Forma Results of Operations

Our unaudited pro forma results of operations for the years ended December 31,
2000 and 1999, assuming the contribution of the Indiana Systems, the acquisition
of the Kentucky Systems, the acquisition of Insight Ohio and each of the
acquisitions and exchanges described in Note C occurred as of January 1, 1999 is
as follows (in thousands, except per share amounts):


                                                       2000             1999
                                                    ---------------------------
Revenue                                              $476,186         $448,322
Net loss applicable to common shareholders             61,712          126,277
Basic and diluted loss per share                         1.03             3.49


Our unaudited pro forma results of operations of the Company for the years ended
December 31, 1999 and 1998, assuming the contribution of the Indiana systems,
the acquisition of the Kentucky systems, and each of the acquisitions and
exchanges described in Note C occurred as of January 1, 1998 is as follows (in
thousands, except per share data):
                                                         1999          1998
                                                         ----          ----
Revenue                                              $ 401,890     $ 375,682
Loss before extraordinary item                         122,457        78,101
Net loss                                               122,457        81,368
Basic and diluted loss per share                          3.66          4.29

G. 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.  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 and are a
50% owner in the joint venture which is managed by Source Media.

On March 3, 2000, pursuant to a merger of the joint venture with a subsidiary of
Liberate Technologies ("Liberate"), SourceSuite LLC 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 LLC continues to own and operate its programming assets, LocalSource
and SourceGuide, and has entered into 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 for 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.

                                      F-16

<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



G. Investments (continued)

We are accounting for our investment in SourceSuite LLC under the equity method
of accounting.  Accordingly, the accompanying statement of operations for the
year ended December 31, 2000 includes a loss of $3.8 million which represents
our 50% share of SourceSuite LLC's net loss for the year ended December 31,
2000.

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.

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.

In addition, in October 1999, we purchased $10.2 million face amount of Source
Media's 12% bonds for approximately $4.1 million. The bonds have a maturity date
of November 1, 2004. The bond discount of $6.1 million is 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 an other than temporary
decline in the value of our investment in Source Media bonds. This impairment
write-down was calculated as the difference between the amortized cost of the
bonds and their fair value as of December 31, 2000. Fair value was determined
using the quoted market price of the bonds.

Commerce.TV

On April 19, 2000, we purchased 2.5 million shares of Commerce.TV Corporation's
("Commerce.TV") Series B mandatorily redeemable, convertible preferred stock for
$5.0 million, which we are accounting for under the cost method.  This preferred
stock has a liquidation preference equal to $5.0 million.

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

                                      F-17
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



G. Investments (continued)

On January 31, 2001, we entered into an agreement with Commerce.TV to provide
our Lexington, Kentucky cable television subscribers with Commerce.TV's service.
We are currently working with Commerce.TV to integrate their network with our
technical platform.


H. Fixed Assets

Fixed Assets consist of:

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

<S>                                            <C>                 <C>
Land, buildings and improvements                  $   23,436        $  13,986
Cable television equipment                         1,082,194          724,383
Furniture, fixtures and office equipment               9,646            9,626
                                               ------------------------------
                                                   1,115,276          747,995
Less accumulated depreciation and amortization      (294,388)        (104,857)
                                               ------------------------------
     Total fixed assets                           $  820,888        $ 643,138
                                               ==============================
</TABLE>


I. Intangible Assets

Intangible assets consist of:

<TABLE>
<CAPTION>
                                                          December 31,
                                                     2000             1999
                                               ---------------------------------
                                                         (in thousands)
<S>                                              <C>              <C>
Franchise rights                                   $1,396,416       $1,223,964
Goodwill                                               71,267            6,867
                                               ---------------------------------
                                                    1,467,683        1,230,831
Less accumulated amortization                        (197,051)         (90,457)
                                               ---------------------------------
     Total intangible assets                       $1,270,632       $1,140,374
                                               =================================
</TABLE>

                                      F-18
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. Debt

Debt consists of:

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

<S>                                        <C>              <C>
Credit Facility                            $           --      $    1,000
Insight Ohio Credit Facility                       25,000              --
Insight Indiana Credit Facility                   298,600         470,000
Insight Kentucky Credit Facility                  356,300         562,000
Insight Midwest 9 3/4% Senior Notes               200,000         200,000
Insight Midwest 10 1/2% Senior Notes              500,000              --
                                         --------------------------------
                                                1,379,900       1,233,000
Unamortized discount on Senior Notes               (7,377)             --
                                         --------------------------------
   Total debt                                  $1,372,523      $1,233,000
                                         ================================
</TABLE>

Credit Facility

We have a credit facility (the "Credit Facility") which expires in December 2005
and provides for a maximum amount of borrowings of $140.0 million.  The Credit
Facility requires us to meet certain financial and other debt covenants,
including a series of financial tests including those measuring our coverage
ratios and leverage.  Borrowings under the Credit Facility bear interest at
either the Alternative Base Rate (ABR) or reserve-adjusted London Interbank
Offered Rate (LIBOR), plus the applicable margin as defined. The applicable
margin varies based upon levels of total leverage ranging from 0.0% to 0.625%
under the ABR option and 1.0% to 1.875% under the LIBOR option.

The interest rate in effect as of December 31, 1999 was 8.0%. The Credit
Facility is secured by substantially all our present and future assets excluding
those of Insight Midwest and Insight Ohio.

On January 5, 2001, the Credit Facility was replaced by the Midwest Holdings
Credit Facility.

Midwest Holdings Credit Facility

On January 5, 2001, through an affiliate, Insight Midwest entered into a credit
facility (the "Midwest Holdings Credit Facility") in connection with the AT&T
Transactions and to repay the outstanding indebtedness under the Insight Indiana
Credit Facility and Insight Kentucky Credit Facility.  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 Midwest Holdings and its

                                      F-19
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. Debt (continued)

subsidiaries.

The Midwest Holdings Credit Facility requires Insight Midwest to meet certain
financial and other debt covenants. Borrowings under this credit facility bear
interest at either an alternative base rate or Eurodollar rate, plus an
additional margin yield to Midwest Holdings' leverage ratio, of between 0.5% and
2.8%.

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 interest rates in effect as of December 31, 2000 and 1999 were 8.8%
and 7.9%.

Insight Indiana Credit Facility

Insight Indiana's credit facility (the "Insight Indiana Credit Facility")
provides for term loans of up to $300.0 million and for revolving credit loans
of up to $250.0 million.  Obligations under this credit facility are secured by
all of the membership interests of Insight Indiana and any amounts payable to
its members.  The Insight Indiana Credit Facility requires Insight Indiana to
meet certain financial and other debt covenants.  Loans under the Insight
Indiana Credit Facility bear interest at an ABR or LIBOR plus an additional
margin tied to certain debt ratios of Insight Indiana.  The interest rates in
effect as of December 31, 2000 and 1999 were 8.8% and 8.1%.

On January 5, 2001, the Insight Indiana Credit Facility was repaid in full and
replaced by the Midwest Holdings Credit Facility.  This resulted in an
extraordinary loss of approximately $4.8 million related to the write-off of
unamortized deferred financing costs.

Insight Kentucky Credit Facility

The Kentucky credit facility (the "Insight Kentucky Credit Facility") provides
for two term loans of up to $100.0 million and $250.0 million and for revolving
credit loans of up to $325.0 million.  Obligations under the Insight Kentucky
Credit Facility are guaranteed by Insight Kentucky and its subsidiaries and any
intercompany notes made in favor of

                                      F-20
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. Debt (continued)

Insight Kentucky and its subsidiaries.  The Insight Kentucky Credit Facility
requires Insight Kentucky to meet certain financial and other debt covenants.
In addition, the Insight Kentucky Credit Facility requires compliance with
certain financial ratios, requiring Insight Kentucky to enter into interest rate
protection agreements covering at least 50%, subject to increase to 60% under
certain circumstances, of its total indebtedness and also contains customary
events of default.  Loans under the Insight Kentucky Credit Facility bear
interest at Insight Midwest's option at an ABR or Eurodollar rate, plus an
additional margin tied to Insight Kentucky's ratio of total debt to annualized
cash flow. The term loans under the Insight Kentucky Credit Facility also bear
interest, at our option, at an ABR or Eurodollar rate, plus an additional
margin.  The interest rates in effect as of December 31, 2000 and 1999 were
8.7% and 8.3%.

On January 5, 2001, the Insight Kentucky Credit Facility was repaid in full and
replaced by the Midwest Holdings Credit Facility.  This resulted in an
extraordinary loss of approximately $4.1 million related to the write-off of
unamortized deferred financing costs.

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 which 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 commence 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, respectively.  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, respectively, 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
liabilities of Insight Midwest, the amounts of which were $770.5 million and
$1.1 billion

                                      F-21
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. Debt (continued)

as of December 31, 2000 and 1999.  The Insight Midwest Senior Notes contain
certain financial and other debt covenants.

Debt Facility Principal Payments

As of December 31, 2000, annual principal payments required on our debt are as
follows (in thousands):

<TABLE>
                  <S>                          <C>
                  2001                             $   19,695
                  2002                                 53,316
                  2003                                 96,304
                  2004                                131,218
                  2005                                124,820
                  Thereafter                          947,170
                                               --------------
                                                   $1,372,523
                                               ==============
</TABLE>

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.  We intend to use the remaining proceeds for general
corporate purposes and other 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 $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.

                                      F-22
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


J. Debt (continued)

As a result of the AT&T Transactions, as of January 5, 2001, required principal
payments under the aforementioned debt have changed to (in thousands):

<TABLE>
             <S>                             <C>
             2001                                  $       --
             2002                                       2,500
             2003                                       3,750
             2004                                      78,750
             2005                                      81,250
             Thereafter                             1,901,250
                                                -------------
                                                   $2,067,500
                                                =============
</TABLE>

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, 2000 and 1999, we had entered into various interest rate swap
and collar agreements effectively fixing interest rates between 4.5% and 7.0%,
plus the applicable margin, on $701.0 million and $766.0 million notional value
of debt. These agreements expire between December 2001 and July 2003.

K. 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. Prior to our IPO, we operated
as a limited partnership and had outstanding limited partnership units.  In
addition, as of December 31, 1998, we had outstanding redeemable Class B units.
In connection with our IPO, the limited partnership units and

                                      F-23
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

K. Capital Stock (continued)

redeemable Class B units were exchanged for shares of our Class A and Class B
common stock as summarized below:


<TABLE>
<CAPTION>
                                                                                                  Common Stock
                                                                         Redeemable       ----------------------------
                                                       LP Units         Class B Units        Class A        Class B
                                                      ----------     -------------------  -------------  -------------
<S>                                                  <C>             <C>                  <C>            <C>
 Balance at December 31, 1998                           41,974,421           47,215,859              --             --
 Recapitalization, and issuance of common
    stock to employees                                 (41,974,421)                  --      11,683,044     10,226,050

 Issuance of common stock in exchange for
    redeemable Class B units                                    --          (47,215,859)     11,024,136             --

 Issuance of common stock in IPO                                --                   --      26,450,000             --
                                                      ----------------------------------------------------------------
 Balance at December 31, 1999                                   --                   --      49,157,180     10,226,050
                                                      ================================================================
</TABLE>


L. @Home Warrants

Under distribution agreements with At Home Corporation, a high-speed internet
access service provider ("@Home"), we provide high-speed Internet access to
subscribers over our network in certain of our cable television systems.  In
connection with the acquisition of the Kentucky systems, Insight Kentucky
obtained agreements whereby @Home issued warrants, effective January 1, 1999, to
Insight Kentucky to purchase shares of @Home Series A Common Stock ("@Home
Stock") at an exercise price of $5.25 per share as adjusted for a two-for-one
stock split which occurred on June 17, 1999.  The warrants become vested and
exercisable, subject to certain forfeiture and other conditions, based on
obtaining specified numbers of @Home subscribers through December 31, 2001.  If
Insight Kentucky were to meet the target number of @Home subscribers through
December 31, 2001, as set forth in the agreement, 180,267 warrants would become
vested and exercisable.  We have not recognized any income related to the
warrants for the years ended December 31, 2000 or 1999.


M. Comprehensive Income

Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"), sets forth rules for the reporting and display of
comprehensive income (net income plus all other changes in net assets from non-
owner sources) and its components in the financial statements. We recognized an
impairment write-down to investments as of and for the year ended December 31,
2000 which resulted in a reversal of a net unrealized gain on investments of
$3.2 million, net of income tax of $2.2 million. For the year ended December 31,
1999, components of other comprehensive income consisted of the net unrealized
gain on investments of $3.2 million, net of income tax of $2.2 million. Prior to
1999, there were no items of other comprehensive income.

                                      F-24
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


   N. Earnings Per Share

   The following table sets forth the computation of basic and diluted loss per
   share. The exchange of limited partnership units for common stock are
   included at an exchange ratio of .399 shares per partnership unit and .238
   shares for each redeemable Class B unit from their issuance date on January
   29, 1998. The general partners' interest is reflected as outstanding in all
   periods. The warrants are included when dilutive. The accretion to redemption
   value of preferred limited units is treated as a reduction of earnings
   available to Common holders.

   Basic earnings per share is computed using average shares outstanding during
   the period. Diluted earnings per share is basic earnings per share adjusted
   for the dilutive effects of the Redeemable Class B units and warrants.

<TABLE>
<CAPTION>
                                                                                  Year ended December 31,
                                                                              2000          1999        1998
                                                                          -------------------------------------
                                                                         (in thousands, except per share amounts)

<S>                                                                       <C>            <C>           <C>
Numerator:
  Net income (loss) applicable to common stockholders                     $(61,712)      $(91,326)     $132,877
  Extraordinary loss from early extinguishment of debt                           -              -         3,267
                                                                          -------------------------------------
Numerator for basic income (loss) per share                                (61,712)       (91,326)      136,144
Effect of dilutive securities                                                    -              -         5,729
                                                                          -------------------------------------
Numerator for diluted income (loss) per share                             $(61,712)      $(91,326)     $141,873
                                                                          =====================================

Denominator for basic income (loss) per share:
   Weighted average Class A common stock                                    49,477              -             -
   Weighted average Class B common stock                                    10,226              -             -
   Weighted average Class A and B units and general partner's
    interest                                                                     -         35,417        20,287
Effect of dilutive securities
   Redeemable Class B units                                                      -              -        10,285
   Warrants                                                                      -              -           621
                                                                          -------------------------------------
Potential dilutive securities                                                    -              -        10,906
                                                                          -------------------------------------
Denominator for dilutive income (loss) per share                            59,703         35,417        31,193
                                                                          =====================================

Basic income (loss) per share before extraordinary item                   $  (1.03)      $  (2.58)     $   6.71
Diluted income (loss) per share before extraordinary item                 $  (1.03)      $  (2.58)     $   4.55
Basic income (loss) per share                                             $  (1.03)      $  (2.58)     $   6.55
Diluted income (loss) per share                                           $  (1.03)      $  (2.58)     $   4.61
</TABLE>

   O. 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.

                                      F-25
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


O. Income Taxes (continued)

Effective July 26, 1999, we converted to a corporation and are now 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 year ended December 31, 2000, we recorded a deferred tax benefit of
$34.3 million and a current tax expense of $500,000 for state and local taxes.
For the year ended December 31, 1999, we recorded net deferred tax benefits of
$8.2 million, relating to losses from operations subsequent to the conversion.
In addition, we recorded a current tax provision of $300,000 for state and local
taxes.

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 consist of the following:


                                                            December 31,
                                                         2000         1999
                                                     -----------------------
                                                          (in thousands)
Deferred tax assets:
   Net operating loss carryforward                   $ 51,348       $  2,871
   Accounts receivable                                    252            145
   Investment in unconsolidated affiliates              1,954         12,899
   Unrealized loss on investments                       3,120              -
   Accrued expenses and other liabilities                  70            127
                                                     -----------------------
Gross deferred tax asset                               56,744         16,042
Valuation allowance                                    (3,120)             -
                                                     -----------------------
Net deferred tax asset                               $ 53,624       $ 16,042

Deferred tax liabilities:
   Depreciation & amortization                       $114,448       $ 47,370
   Unrealized gain on investments                           -          2,201
                                                     -----------------------
Gross deferred tax liability                          114,448         49,571

                                                     -----------------------
Net deferred tax liability                           $(60,824)      $(33,529)
                                                     =======================


The increase in the valuation allowance relates to the unrealized loss on
investments.

                                      F-26
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


   O. Income Taxes (continued)

   The reconciliation of income tax expense computed at the U.S. federal
   statutory rate to income tax expense for the years ended December 31, 2000,
   1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                 Year ended December 31,
                                                            2000           1999          1998
                                                         --------------------------------------
                                                                     (in thousands)
<S>                                                      <C>            <C>            <C>
Expense (benefit) at federal statutory rate              $(26,116)      $(17,756)      $ 47,100
State and local taxes, net                                 (5,258)        (1,141)             -
Expenses not deductible for U.S. tax purposes                  70            196             11
Non-deductible amortization                                   726              -              -
Preferred interest accrual                                 (6,367)             -              -
Increase in valuation allowance                             3,120              -              -
Adjustment to record charge upon conversion from
 a partnership to a corporation                                 -         39,526              -

Loss (income) for which no expense/benefit has
 been provided                                                  -         10,761        (47,111)
                                                         --------------------------------------
Income tax (benefit) expense                             $(33,825)      $ 31,586       $      -
                                                         ======================================
</TABLE>

   As of December 31, 2000, we had a net operating loss carryforward of $125.0
   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 2020.


   P. 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-27
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


P. 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, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                      Weighted Average
                                                     Options           Exercise Price
                                                    ----------------------------------
       <S>                                          <C>               <C>
       Outstanding as of January 1, 1999                    -              $    -
       Granted                                      2,900,900               24.57
       Exercised                                            -                   -
       Canceled/forfeited                             (15,000)              24.50
                                                    ----------------------------------
       Outstanding as of December 31, 1999          2,885,900               24.57
       Granted                                        217,480               15.91
       Exercised                                            -                   -
       Canceled/forfeited                            (130,500)              23.93
                                                    ----------------------------------
       Outstanding as of December 31, 2000          2,972,880              $23.96
                                                    ==================================
</TABLE>

The weighted average fair value of options granted in 2000 and 1999 was $9.55
and $13.39 per share. As of December 31, 2000, 569,400 of the options were
exercisable with a weighted average exercise price of $24.32. The following
summarizes details of outstanding stock options as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                      Weighted Average
                                                     Weighted             Remaining
   Range of Exercise       Number of Options          Average         Contractual Life
        Prices                Outstanding         Exercise Price         (in years)
   -------------------------------------------------------------------------------------
   <S>                     <C>                   <C>                  <C>
     $13.25 - $17.94             159,980               $14.51                9.6
     $20.38 - $29.18           2,782,900                24.44                8.6
          $30.13                  30,000                30.13                8.7
                          --------------------------------------------------------------
                               2,972,880               $23.96                8.7
                          ==============================================================
</TABLE>

Pursuant to Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"), 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. 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 for the years ended December 31, 2000
and 1999 would have been $62.9 million and $1.05 and $86.2 million and $2.63.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model. The following assumptions were applied in

                                      F-28
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

determining the fair value: weighted average risk-free interest rate - 6.25%
(2000) and 6.5% (1999); expected dividend yield - 0%; expected option life - 7
years; and expected stock price volatility - 50% (2000) and 42% (1999).

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
$14.7 million. The loans are non-recourse and are represented by notes which are
secured by our common stock pledges equal to the number of shares each
individual received as compensation. Through April 1, 2001 the notes bear
interest at a rate of 6% per annum and will adjust to a rate of 5.1% thereafter.
The notes are payable upon the fifth anniversary, 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. As of
December 31, 2000 and 1999, accrued interest on these loans are fully reserved
as a result of a loan forgiveness provision approved by the board of directors.

Q. 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% Senior Notes as of December 31, 2000 was $198.5
million.

                                      F-29
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Q. Financial Instruments (continued)

The fair value of Insight Midwest's 10 1/2% Senior Notes as of December 31, 2000
was $515.0 million.

Interest rate swap agreements:  The fair value of swap agreements are not
recognized in the financial statements. The fair value (cost) to us if we would
have disposed of such swap agreements would have been $(1.9) million and $7.2
million as of December 31, 2000 and 1999.

R. Related Party Transactions

Through November 1999, we had an agreement with Media One that enabled us to
obtain certain services (principally pay and basic cable programming services)
and equipment at rates lower than those that would be available from independent
parties. In each of the years ended December 31, 1999 and 1998, programming and
other operating costs include $200,000 of expenses for programming services paid
directly to Media One.

In addition, we purchase substantially all of our pay television and other
programming for the Indiana and Kentucky systems from affiliates of AT&T
Broadband. Charges for such programming were $57.4 million, $29.6 million and
$1.4 million for the years ended December 31, 2000, 1999 and 1998.  As of
December 31, 2000 and 1999, $9.9 million and $10.5 million of accrued
programming costs were due to affiliates of AT&T Broadband. We believe that the
programming rates charged by affiliates of AT&T Broadband are lower than those
available for independent parties.

Telephony Agreements

On July 17, 2000, we entered into definitive agreements with AT&T Broadband, LLC
for the provision by AT&T Broadband of all-distance telephone service utilizing
our cable infrastructures under the AT&T brand name. Telephony revenues are to
be attributed to AT&T Broadband who, in turn, will pay us a monthly per line
access fee. AT&T Broadband will also pay us for marketing, installation and
billing support. AT&T Broadband would be required to install and maintain the
necessary switching equipment, and would be the local exchange carrier of
record. It is expected that we will market the telephone services both
independently and as part of a bundle of services.

S. 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 up to 5% of the
employee's wages. During 2000, 1999 and 1998, we matched contributions of
$957,000, $562,000 and $188,000.

                                      F-30
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

T. Commitments and Contingencies

Operating Lease Agreements

We lease and sublease equipment and office space under various operating lease
arrangements expiring through December 31, 2015. Future minimum rental payments
required under operating leases as of December 31, 2000 are as follows (in
thousands):

               2001                      $ 3,533
               2002                        2,884
               2003                        2,725
               2004                        2,341
               2005                        2,037
               Thereafter                  1,783
                                        --------
                    Total                $15,303
                                        ========

Rental expense for the years ended December 31, 2000, 1999 and 1998 was $4.6
million, $2.1 million and $1.0 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. The classes have not been certified. We believe that the Kentucky systems
have substantial and meritorious defenses to these claims.

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.

U. Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                     Three months ended
                                   ------------------------------------------------------   Year ended
2000                                March 31 (1)  June 30 (1) September 30   December 31   December 31
                                   --------------------------------------------------------------------
                                                (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 income (loss) per share         $   0.57     $  (0.23)      $  (0.28)     $  (1.08)     $  (1.03)
Diluted income (loss) per share       $   0.57     $  (0.23)      $  (0.28)     $  (1.08)     $  (1.03)
</TABLE>

(1)  The March 31, 2000 and June 30, 2000 quarterly financial data include the
     results of Insight Ohio, which was accounted for under the equity method
     prior to August 8, 2000, the date of acquisition.

                                      F-31
<PAGE>

                     INSIGHT COMMUNICATIONS COMPANY, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

U. Quarterly Financial Data (Unaudited) (continued)

<TABLE>
<CAPTION>
                                                  Three months ended
                                   -------------------------------------------------------------
                                                                                      Year ended
1999                               March 31    June 30   September 30   December 31   December 31
                                   --------------------------------------------------------------
                                              (in thousands, except per share amounts)
<S>                                <C>        <C>            <C>           <C>           <C>
Revenue                             $45,377   $ 46,406       $ 46,581      $104,329      $242,693

Operating loss                       (3,805)    (3,065)       (24,949)       (3,235)      (35,054)

Income (loss) before
 extraordinary item                   7,238    (14,912)       (67,669)       (8,865)      (84,208)

Net income (loss)                     7,238    (14,912)       (67,669)       (8,865)      (84,208)

Basic income (loss) per share       $  0.24   $  (1.07)      $  (1.43)     $  (0.15)     $  (2.58)
Diluted income (loss) per share     $  0.26   $  (1.07)      $  (1.43)     $  (0.15)     $  (2.58)
</TABLE>

                                      F-32