<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 1999

                         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.)

         126 East 56th Street                                   10022
          New York, New York                                  (Zip Code)
Address of principal executive offices)

       Registrant's telephone number, including area code: (212) 371-2266

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 29, 2000 was approximately $748,051,470.

     The number of shares of the registrant's common stock outstanding as of
February 29, 2000: 49,157,180 shares of Class A Common Stock and 10,226,050
shares of Class B Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                                          Location in Form 10-K
                    Document                              in which incorporated
                    --------                              ---------------------
Registrant's Proxy Statement relating to                       Part III
the 2000 Annual Meeting of Stockholders
<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.

                                    FORM 10-K

                                Table of Contents

<TABLE>
<CAPTION>
                                                                                     Page
                                                                                     ----
                                     PART I


<S>      <C>                                                                          <C>
Item 1.  Business....................................................................  2
Item 2.  Properties.................................................................. 41
Item 3.  Legal Proceedings........................................................... 42
Item 4.  Submission of Matters to a Vote of Security Holders......................... 43

                                 PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters....... 45
Item 6.  Selected Financial Data..................................................... 46
Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations....................................................... 47
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.................. 53
Item 8.  Financial Statements and Supplementary Data................................. 54
Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure........................................................ 54

                                PART III

Item 10. Directors and Executive Officers of the Registrant.......................... 55
Item 11. Executive Compensation...................................................... 55
Item 12. Security Ownership of Certain Beneficial Owners and Management.............. 55
Item 13. Certain Relationships and Related Transactions.............................. 55

                                 PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............ 56

SIGNATURES........................................................................... 59
</TABLE>


                                       i
<PAGE>

                           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
our most recent registration statement dated July 20, 1999, as well as any
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.


                                       1
<PAGE>

                                     PART I

Item 1.  Business

     Unless otherwise specified, all cable television industry statistical data
in this report are from Paul Kagan & Associates, a leading cable television
industry publisher.

General

     We are the 8th largest cable television system operator in the United
States based on customers served after giving effect to previously announced
industry acquisitions. We provide cable television services to approximately
935,000 customers and pass approximately 1.5 million homes as of December 31,
1999. We have tightly grouped clusters of cable television systems with
approximately 98% of our customers concentrated in the four contiguous states of
Indiana, Kentucky, Ohio and Illinois. Our systems have a very high concentration
of customers served by each headend or technical center of the network allowing
us to more economically deliver an array of entertainment, information and
telecommunication services, including interactive digital video, high-speed data
access and telephone service products. Upon completion of our rebuild efforts,
which is expected to occur by the end of 2000, over 96% of our customers will be
served from nine headends. In addition to our optimal state-of-the-art technical
configuration, our market research indicates that our clusters have attractive
market characteristics and demographics for offering new and enhanced products
and services that take advantage of the significant bandwidth of our cable
network. We believe that because of this advantageous combination, we are very
well positioned to exploit the new business opportunities available to cable
television operators.

     Recognizing the opportunities presented by newly available products and
services, the strength of our market characteristics and favorable changes in
the regulatory environment, we developed and executed a strategy to become a
competitive, full service provider of entertainment, information and
telecommunication services for the communities served by our networks. We intend
to capitalize on our highly clustered cable television systems to economically
rebuild 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 marketing strategy is designed to capitalize on these trends by
offering our customers a suite of entertainment, information and
telecommunication services on a bundled basis. By bundling our products and
services, we provide our customers with an increased choice of services at a
reduced cost, which we believe will result in higher customer satisfaction,
increased use of our services and greater customer retention. Because our
broadband cable network can offer such a wide variety of communication services,
we believe our service offering will provide us with a competitive advantage
over alternative wireline and wireless telecommunications and multichannel video
providers, such as incumbent telephone companies and direct broadcast satellite
television systems. We began offering new and enhanced products and services,
such as interactive digital video and high-speed data access, during 1999 and
intend to offer telecommunication services under the AT&T brand name by the end
of 2000.


                                       2
<PAGE>

     We have conducted research and held numerous focus group sessions in our
local markets leading us to believe that products and services such as
interactive digital video, high-speed data access and telephony will have high
customer appeal. As a result of our capital investment, we expect to be able to
provide these products and services on a cost effective basis capitalizing on
the high bandwidth capabilities of our cable network. Likewise, we believe that
the highly clustered nature of our systems will enable us to more efficiently
invest our marketing dollars and maximize our ability to enhance customer
awareness, increase use of our products and services and build brand support.
Our emphasis is on system reliability, engineering support and superior customer
satisfaction. In addition to our broad product offerings, we also emphasize a
high level of locally-focused content and customer service.

     To facilitate the deployment of our enhanced products and services, we are
in the process of rebuilding almost all of our network to allow us to deliver
more information and entertainment services through our cable systems and to
provide for two-way communications capability, including telecommunication
services. We have rebuilt approximately 51% of our network miles as of December
31, 1999, and intend to have substantially all of our network rebuilt by the end
of 2000. We expect to complete our network rebuild in 2000 with a total
investment of approximately $195.2 million.

     We are a Delaware corporation formed in 1999. Our principal offices are
located at 126 East 56th Street, New York, New York 10022, and our telephone
number is (212) 371-2266.


                                       3
<PAGE>

     The following table presents a profile of our systems and systems in which
we have an economic interest as of December 31, 1999, except as otherwise
indicated.

                Selected Technical, Operating and Financial Data
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                       National         Columbus          Indiana         Kentucky
                                                                        Systems           System          Systems          Systems
<S>                                                                   <C>             <C>               <C>             <C>
Technical Data:
     Network miles .............................................          1,739            2,720            7,629            8,513
     Number of headends ........................................              5                1               41               17
     Number of headends as of December 31, 2000(1) .............              5                1                9                4
     Number of headends serving over 96% of our customers
     expected as of December 31, 2000(1) .......................              2                1                3                3

Operating Data:
     Homes passed ..............................................        151,162          178,310          512,822          680,122
     Basic customers ...........................................         86,573           84,236          332,570          432,164
     Basic penetration .........................................           57.3%            47.2%            64.9%            63.5%
     Premium units .............................................         98,545           98,202          226,819          332,690
     Premium penetration .......................................          113.8%           116.6%            68.2%            77.0%

Financial Data:
     Revenues ..................................................      $  41,407        $  46,747        $ 144,306        $  56,980
     EBITDA(2) .................................................         25,538           19,220           75,385           28,161
     Adjusted EBITDA(3).........................................         12,028           20,654           75,593           27,918
     Adjusted EBITDA margin(4) .................................           29.1%            44.2%            52.3%            49.0%
     Operating income (loss) ...................................      $ (29,387)       $  11,980        $  (8,544)       $   2,877
     Net loss ..................................................        (27,693)          (6,153)         (42,880)         (13,635)
     Cash provided by (used in) operating activities ...........         (7,099)          22,425           60,921           42,626
     Cash used in investing activities .........................       (406,096)         (26,754)         (87,669)         (22,722)
     Cash provided by (used in) financing activities ...........        492,021           (1,498)          10,000           11,627

Other Data:
     Insight's ownership(5) ....................................            100%              75%              50%              50%
     Location of systems........................................      CA, GA, IL               OH               IN               KY
     Date of acquisition/consulting.............................         Various      August 1998          Various     October 1999
</TABLE>

-----------
(1)  Represents an estimate based on our current rebuild program.

(2)  Represents earnings (loss) before interest, taxes, depreciation and
     amortization and extraordinary items. 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 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.

(3)  Represents EBITDA prior to management and consulting expenses and
     excluding any non-cash items such as 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.

(4)  Represents adjusted EBITDA as a percent of total revenues.

(5)  Insight's 75% ownership in the Columbus system consists of a non-voting
     common interest.


                                       4
<PAGE>

Recent Developments

     Initial Public Offering

     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 were 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 were
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.

     The Kentucky Acquisition and Associated Transactions

     On October 1, 1999, we completed the purchase of a combined 50% interest in
InterMedia Capital Partners VI, L.P. for $341.5 million, including expenses and
adjustments, pursuant to an agreement with related parties of Blackstone Capital
Acquisition Company, LLC, related parties of InterMedia Capital Management VI,
LLC and a subsidiary and related party of AT&T Broadband, LLC. Insight Midwest
assumed the outstanding debt of InterMedia Capital Partners VI, L.P. which was
$742.1 million. At the same time, we also completed our agreements with AT&T
Broadband and its affiliates pursuant to which we each acquired a 50% interest
in a newly-formed partnership known as Insight Midwest, L.P., into which we each
contributed our 50% interests in InterMedia Capital Partners VI, L.P., as well
as our 50% interests in Insight Communications of Indiana, LLC, the owner of our
Indiana systems. We are the general partner and an affiliate of AT&T Broadband
is the limited partner of Insight Midwest. We manage and operate both the
Indiana and Kentucky systems pursuant to management agreements for which we
receive an annual fee equal to 3% of their gross annual revenues. Insight
Midwest, through its subsidiaries, is the largest owner and operator of cable
television systems in the States of Indiana and Kentucky. As of December 31,
1999, Insight Midwest's cable television systems passed approximately 1.2
million homes and served approximately 748,800 customers.

     Concurrently with the above transactions, 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
Insight Kentucky.

     Managed Indiana Systems

     On October 1, 1999, we entered into a consulting agreement with InterMedia
Partners Southeast, an affiliate of AT&T Broadband, which provides for our
management of the day-to-day operations of a cable television system located in
Shelbyville, Kentucky serving approximately 6,000 customers as of December 31,
1999. On March 17, 2000, we expanded our agreement with InterMedia Partners
Southeast to include our management commencing May 1, 2000 of cable television
systems located in Indiana serving approximately 114,000 customers as of
December 31, 1999. The agreement provides for a term ending April 30, 2002 and
provides for an annual consulting fee payable to us equal to 3% of the gross
revenues of the systems. For the year ended December 31, 1999, these systems had
total revenues of approximately $55.0 million. Nearly all of these systems are
contiguous to our other Kentucky and Indiana systems.

     Transactions with Source Media and Liberate Technologies

     On November 17, 1999, we entered into a 50/50 joint venture with Source
Media, Inc. Source Media contributed to the joint venture its VirtualModem and
Interactive Channel products and businesses, including LocalSource and
SourceGuide, and manages the joint venture. We contributed $13.0 million of
equity financing


                                       5
<PAGE>

to the joint venture. On the same date, we acquired 842,105 shares of Source
Media common stock for $12.0 million and five-year warrants to purchase an
additional 4,596,786 shares of Source Media at an exercise price of $20 per
share.

     On March 3, 2000, pursuant to a merger with a subsidiary of Liberate
Technologies, the joint venture sold all of its VirtualModem assets in exchange
for the issuance to each of us and Source Media of 886,000 shares of Liberate
common stock. Liberate's common stock had a closing sale price per share of
$82.00 as of March 24, 2000. We and Source Media have agreed not to sell 80% of
our Liberate shares prior to July 31, 2000. Our 50/50 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.

     Agreement in Principle with AT&T

     On March 15, 2000, we reached an agreement in principle with AT&T Corp. for
the delivery of telephone service utilizing our cable television systems under
the "AT&T" brand name. The terms of the agreement in principle provide that we
will market, service and bill for local telephone service. AT&T would be
required to install and maintain the necessary switching equipment, and would be
the local exchange carrier of record. AT&T would pay us a fee for the use of the
local telephone lines, and will also compensate us for installation and
maintenance services at customers' residences. In addition, AT&T would pay us
commissions for sales we make to our customers. We expect to sell the
AT&T-branded local telephone service separately and as part of bundled
offerings, which would also include the sale of AT&T long-distance telephone
services. The agreement in principle is subject to the negotiation and execution
of definitive agreements.

     Greenwood Letter of Intent

     On March 21, 2000, Insight Midwest, L.P. entered into a letter of intent
with Cable One, Inc., a subsidiary of The Washington Post Company, for the
acquisition of a cable television system serving approximately 16,000 customers
in Greenwood, Indiana as of December 31, 1999. Due to its geographic proximity,
we intend to integrate the Greenwood system with our Central District in
Indiana. The acquisition by Insight Midwest, L.P. of the Greenwood system would
occur upon completion of a proposed trade of systems between Cable One and AT&T
Broadband, LLC. The transaction is subject to the negotiation and execution of
definitive agreements.

     Expansion of Insight Midwest

     On March 23, 2000, we entered into a letter of intent with AT&T Broadband
to contribute to Insight Midwest additional cable television systems serving
approximately 537,000 customers, nearly doubling the customer base of Insight
Midwest. Through a series of transactions, we will contribute to Insight Midwest
our interests in systems serving approximately 187,000 customers, and AT&T
Broadband will contribute systems serving approximately 350,000 customers.
Initially we would exchange our Claremont, California system for a system in
Freeport, Illinois, subject to completion by AT&T Broadband of its proposed
acquisition of MediaOne. The Freeport system would be integrated into our
Rockford, Illinois system, creating a cluster of approximately 75,000 customers
in the northern part of the state. We would also purchase from AT&T Broadband
systems serving approximately 100,000 customers in North Central Illinois.
Concurrently with this purchase, we would contribute to Insight Midwest all of
our systems not already owned by Insight Midwest, including the newly purchased
Illinois systems, our expanded Rockford, Illinois cluster, our interest in our
Columbus, Ohio system and our Griffin, Georgia system, as well as our systems in
Indiana not already owned by Insight Midwest. At the same time, AT&T Broadband
would contribute to Insight Midwest systems located in Central and North Central
Illinois serving approximately 250,000


                                       6
<PAGE>

customers. As a result, Insight Midwest would increase its customer base of
approximately 748,800 as of December 31, 1999 to approximately 1.3 million, and
we would increase our total number of customers served by approximately 350,000.
AT&T Broadband would receive an amount of cash from us. Upon completion of the
transactions, Insight Midwest would remain equally owned by us and AT&T
Broadband, and we would continue to serve as the general partner and manage and
operate the Insight Midwest systems. The transactions are subject to the
negotiation and execution of definitive agreements.

Business Strategy

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

     Focus on operating clusters with attractive technical and demographic
profiles

     We operate highly clustered 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 invest our marketing
dollars and maximize our ability to establish customer awareness, increase
penetration and build brand support. Our demographic profile is characterized by
strong new housing growth and low unemployment in rapidly growing communities,
most 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 rebuild our cable network

     We have committed to rebuild our cable network expeditiously in order to
provide new and enhanced products and services, increase the programming and
telecommunication choices for our customers, improve our competitive position
and increase overall customer satisfaction. We are in the process of rebuilding
almost all of our network to provide at least 750 MHz bandwidth and two-way
active capability. 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 rebuild will allow us to expeditiously
offer these services to substantially all of our customers.

     By the end of 2000, we expect that substantially all of our customers will
be served by systems with at least 750 MHz bandwidth and two-way active
capability. As each system's rebuild progresses, we will deploy new and enhanced
products and services. In 1999, we invested approximately $77.3 million, and we
plan to invest approximately $85.1 million more to rebuild our systems by the
end of 2000.

     Introduce new and enhanced products and services

     Our marketing strategy is to offer our customers an array of entertainment,
information and telecommunication services on a bundled basis. We believe by
bundling our products and services our customers will have an increased choice
at a reduced cost resulting in higher customer satisfaction, higher penetration
and reduced churn. We have conducted research and held numerous focus group
sessions in our local markets, which lead us to believe that these services will
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


                                       7
<PAGE>

of these services, we have entered into arrangements with several industry
leaders, including (1) an agreement in principle with AT&T to provide
telecommunication services; (2) agreements with Excite@Home and Road Runner to
provide high-speed data services; (3) an agreement with DIVA Systems Corporation
to provide video-on-demand; and (4) an agreement with Liberate Technologies to
utilize their software platform for deployment of interactive television
services.

     Leverage strong local presence to enhance customer and community relations

     Excellent customer service is a key element of our business 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 will be
effective in the deployment of interactive and high-speed data products.

     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.

     To support our business strategy, we have developed a financial strategy to
pursue value-enhancing transactions in nearby or adjacent geographies. To
augment our internal customer growth, we will seek acquisitions that
strategically fit our clustering and operating strategy. We will seek strategic
acquisitions based upon disciplined criteria with a focus on the following four
primary factors:

     .    A high ratio of customers to headends;

     .    Market significance;

     .    Geographic proximity to our other systems; and

     .    An acceptable return on investment.

We do not currently have any binding agreements for any future acquisitions.

     Since initiating this strategy in early 1997, we have completed a total of
three acquisitions, three asset swaps and two joint ventures. As of December 31,
1997, our cable systems had approximately 180,000 customers and were located in
seven states with no clear clustering of properties. As of December 31, 1999, we
owned, operated and managed cable television systems serving approximately
935,000 customers, with approximately 98% of our customers clustered in the
States of Indiana and Kentucky; Rockford, Illinois; and Columbus, Ohio.


                                       8
<PAGE>

Technical Overview

     We believe that in order to achieve consistently high levels of customer
service, reduce operating costs, maintain a strong competitive position and
deploy important new technologies, we will need to install and maintain a
state-of-the-art technical platform. The deployment of fiber optics, 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 telecommunication services.

     As of December 31, 1999, our systems were comprised of approximately 20,600
miles of network passing approximately 1,522,400 homes resulting in a density of
approximately 74 homes per mile. As of that date, our systems were made up of an
aggregate of 66 headends. We intend to continue our strategy of consolidating
headends by eliminating approximately 53 headends by December 31, 2000, at which
point approximately 96% of our customers will be served by nine headends.

     Our network design calls for a digital two-way active network with a fiber
optic trunk system carrying signals to nodes within our customers'
neighborhoods. The signals are transferred to coaxial network at the node for
delivery to our customers. At December 31, 1999, an average of approximately 800
homes were being served by each fiber node. 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 will play 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.


                                       9
<PAGE>

     The following chart outlines the status of the network capacities currently
and as planned, based on our current rebuild program:

<TABLE>
<CAPTION>
                                                  Percent of Network Miles
                                 --------------------------------------------------------
                                               Greater than       Greater      Percent of
                                               or Equal to 450    than or      Network
                                 Less than     MHz and Less       Equal to     Two-Way
                                 450 MHz       than 750 MHz       750 MHz      Capable
                                 -------       ------------       -------      -------
<S>                                <C>             <C>              <C>          <C>
As of December 31, 1999            24.0%           24.7%            52.3%        55.5%
As of December 31, 2000*            2.3%            7.3%            93.3%        93.3%
</TABLE>

----------
*    Estimate based on our current rebuild program. There can be no assurance
     that our current rebuild program will be achieved.

Products and Services

     Traditional cable television services

     We offer our customers a full array of traditional cable television
services and programming offerings. We tailor both our basic line-up and our
additional channel offerings to each regional system in response to
demographics, programming preferences, competition and local regulation. We
offer a basic level of service which includes up to 25 channels of television
programming. Approximately 94% of our customers choose 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, 1999, premium units as a percentage of basic subscribers was
approximately 81%.

     Our 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 rebuilds are activated, we will deploy new and enhanced products and
services in most of our markets, including interactive digital video and
high-speed data services. In addition, we intend to deploy telecommunication
service under the AT&T brand during 2000.


                                       10
<PAGE>

     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
the capacity to design a more extensive digital product that is rich in program
offerings and highly interactive with our customers. For example, we offer a
video-on-demand service in selected markets that allows our customers
significantly more viewing options. Our interactive digital services also allow
us to offer customized information for our customers that is rich in local
content and targeted to a specific system or community. Our systems also
continue to be activated with two-way communication network capability, enabling
us to provide truly interactive and locally based Internet-style products and
services.

     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 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. In addition,
approximately 75% of the homes passed by our systems still do not have an online
account to use the Internet, which we believe will make our local information,
Internet-style product particularly appealing to this group.

     In most of our digital launches, we are providing a package of digital
services, known as "Digital Gateway." For $6.95 per month, our customers can
purchase Digital Gateway and 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.

     SourceSuite LLC, our equally owned joint venture with Source Media, Inc.,
provides its interactive program guide known as SourceGuide in our Digital
Gateway. SourceGuide enables customers to navigate through program lists, as
opposed to viewing a scrolling screen, and delivers other interactive functions
such as ordering pay-per-view. SourceSuite's LocalSource product is designed to
allow us to provide our customers with an Internet type experience on a
television platform using only a TV remote control. With the LocalSource
product, we are able to deliver interactive programming that is both informative
and entertaining, and we expect to provide extensive communications tools to
support interaction between customers, advertisers, sponsors, merchants and
direct marketers resulting in multimedia addressable advertising opportunities
for both local and national advertisers. The service is divided into four
sub-categories:

     .    "Your Community Today" provides both current local information as well
          as national updates on topics such as news, weather, sports, business,
          horoscopes, soaps and lotteries;

     .    LocalGuide is a source for current community information such as a
          Dining Guide, Cinema Guide, Events Guide, Kidzone and Games;

     .    My Neighborhood provides information on local topics such as schools,
          religion, town hall and


                                       11
<PAGE>

          transportation; and

     .    QuickSource is an on-demand library of useful facts on a range of
          subjects from health to legal to car care or insurance.

     We believe that LocalSource is a compelling introduction to cable's
broadband capability which will stimulate early demand for data services and
make cable a more essential service for the customer, resulting in increased
customer satisfaction and penetration and reduced churn.

     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. The Liberate software includes a wide range of products and
services, including Liberate TV Navigator and Liberate TV Connect. The
acquisition by Liberate of the VirtualModem technology from SourceSuite extends
the Liberate software to a broader range of cable television set-top boxes. With
the addition of VirtualModem, the Liberate software will provide us with an
interactive software platform for our existing base of limited-memory customer
set-top boxes as well as the new generation of set-top boxes, in each case
supporting our interactive applications such as LocalSource.

     We have entered into an agreement with DIVA Systems Corporation, which has
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.

     In addition to the Digital Gateway service, customers can select additional
digital packages, each of which includes a number of popular cable networks.
These packages allow viewers to customize the types of service they receive and
fit individual interests. The packages will be generally developed but tailored
to satisfy the tastes and needs of the specific local market and will be
generally available for an additional $4.95 each per month. Currently, we offer
three core programming packages in all of our digital markets and provide a
discount by allowing customers to purchase all three packages for the price of
two. The packages may include the following:

     .    The Family Pak, which is comprised of networks such as Discovery, BBC
          America, Much Music and the Sci-Fi Channel;

     .    The Movie Pak, which is comprised of specialty movie networks such as
          six Encore theme channels, Turner Classic Movies, the Independent Film
          Channel and Romance Classics; and

     .    The Sports Pak, which consists of several ESPN channels, The Golf
          Channel, Fox Sports World and Classic Sports.

     In addition to these core programming packages, we have developed
additional niche packages, such as Spanish channels or music video channels,
reflective of local customer tastes.

     We will continue to launch the Digital Gateway service in all of our
markets as rebuilds are completed. As the rebuilds of the Indiana systems are
completed during 2000, we will migrate the AT&T Broadband digital product to our
interactive digital product. Additionally, in 2000, we expect to convert the
Kentucky systems from the existing InterMedia Capital Partners VI, L.P. digital
product to our interactive digital product. While the AT&T Broadband and
InterMedia Capital Partners VI, L.P. digital products were targeted to fill
programming voids and compete with direct broadcast satellite television
systems, our Digital Gateway


                                       12
<PAGE>

service is designed to provide our customers with an Internet style experience
as well as enhanced programming choices, which we believe will result in higher
penetration and customer satisfaction and reduced churn. Therefore, we expect to
achieve penetrations in the Indiana systems and the Kentucky systems with our
Digital Gateway service well beyond the 10% to 15% penetration that the AT&T
Broadband digital products currently achieve within two years of launch. Within
twelve months of the launch of our Digital Gateway in our Rockford, Illinois
system, several of the activated areas have achieved 18% digital penetration,
with incremental revenue per digital customer of $24.00 per month.

     In the small markets where we do not plan a rebuild, we have launched a
digital product which is packaged and priced similarly but is not interactive.
We launched this type of limited digital service in Griffin, Georgia in December
1998 and achieved over 16% penetration within twelve months of launch with
incremental revenue per digital customer of over $17.45 per month.

     High-Speed Data

     We plan to introduce high-speed data service for personal computers over
our network in all of our rebuilt systems. We have signed a distribution
agreement with Excite@Home to launch high-speed data service in all of our
markets, except for Columbus, Ohio. With respect to the Columbus system, we have
entered into an agreement to utilize the Road Runner service, and with High
Speed Access Corp. to support delivery of the service. As of December 31, 1999,
Excite@Home served 2,336 of our customers in the Indiana systems and 6,000 of
our customers in the Kentucky systems.

     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. 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 should provide
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.


                                       13
<PAGE>

     We believe our cable systems have attractive demographics for high-speed
data. Based on research of our systems at November 1998 by Peter D. Hart
Research Associates Inc., approximately 49% of our then customers had personal
computers in the home and approximately 51% of those that had computers were
currently on-line. We believe university markets, such as Bloomington and
Lafayette, Indiana, Lexington and Bowling Green, Kentucky and Columbus, Ohio and
affluent suburbs like Noblesville, Indiana are particularly well suited for this
product as each of these markets has above average personal computer
penetration.

     Telecommunications

     On March 15, 2000, we reached an agreement in principle with AT&T Corp. for
the delivery of telephone service utilizing our cable television systems under
the "AT&T" brand name. The terms of the agreement in principle provide that we
will market, service and bill for local telephone service. AT&T would be
required to install and maintain the necessary switching equipment, and would be
the local exchange carrier of record. AT&T would pay us a fee for the use of the
local telephone lines, and will also compensate us for installation and
maintenance services at customers' residences. In addition, AT&T would pay us
commissions for sales we make to our customers. We expect to sell the
AT&T-branded local telephone service separately and as part of bundled
offerings, which would also include the sale of AT&T long-distance telephone
services. The agreement in principle is subject to the negotiation and execution
of definitive agreements. We believe there is significant potential for this
service based both on our management's experience in the U.K. cable market and
the success of other operators such as Cox Communications and Cablevision since
entering this business. There can be no assurance that a definitive agreement
will be successfully negotiated with AT&T, or, if negotiated, that such
agreement will be on the terms described in this report.

Business Background

     We were co-founded in 1985 as a limited partnership 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.

     Between 1985 and 1988, we assembled a group of systems that reflected our
focused acquisition criteria of high housing growth in markets with attractive
demographics. As a result of this strategy, we owned largely suburban systems in
high growth corridors of major metropolitan areas. Through housing growth and
increased basic penetration in the five years ended December 31, 1997, our
systems achieved growth rates for homes passed and customers of 4.8% and 5.9%,
respectively, over twice the national average and one of the highest internal
growth rates in the industry.

     In addition to many years of conventional cable television experience, our
management team has been involved in the development and deployment of full
service telecommunications networks since 1989. Through a then-related entity,
Insight Communications Company UK, L.P., our management and our related parties
entered the cable television market in the United Kingdom, where today modern
hybrid fiber-coaxial 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, after giving effect to
previously announced transactions.

     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


                                       14
<PAGE>

to rebuild our network promptly after it became clear that the 1996 Telecom Act
would encourage competition in the telecommunications 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 telecommunications
network providing not only standard video services, but also interactive digital
video, high-speed data access and voice telecommunication 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
Insight-managed 50/50 joint ventures we formed with AT&T Broadband and its
affiliates in October 1998 with respect to the Indiana systems and in October
1999 with respect to the Kentucky systems. As of December 31, 1997, our systems
had approximately 180,000 customers with the two largest concentrations in Utah
and Indiana, which together represented less than half of our customers. We
believe that we have successfully transformed our assets so that today we own,
operate and manage a cable television network serving approximately 935,000
customers with approximately 98% of our customers clustered in the contiguous
states of Illinois, Indiana, Ohio and Kentucky. Our current assets are
reflective of our strategy to own systems that have high ratios of customers to
headends.

     The following is a list of significant recent transactions that were
designed to implement our new business strategy:

     .    Lafayette, Indiana. In December 1997, we exchanged with Cox
          Communications our suburban Phoenix, Arizona system serving
          approximately 36,300 customers for a system in Lafayette, Indiana
          serving approximately 38,100 customers plus approximately $12.6
          million paid in cash to Insight. The Phoenix system comprised only 8%
          of its designated market area and was made up of three separate
          headends while the Lafayette system is made up of a single headend, is
          the major operator in the market and is located in a region where we
          have substantial assets.

     .    Rockford, Illinois. In January 1998, we purchased a cable system
          serving approximately 66,000 customers in the Rockford, Illinois area.
          The system is made up of a single headend and is the primary cable
          system in the market.

     .    Columbus, Ohio. In August 1998, we acquired a 75% non-voting interest
          in a cable system serving approximately 90,000 customers in the
          eastern portion of the City of Columbus and the surrounding suburban
          communities. The Columbus system, which is made up of a single
          headend, passes one-third of the homes in the Columbus area.

     .    Indiana Joint Venture. In October 1998, we exchanged with an affiliate
          of AT&T Broadband our Utah systems serving approximately 56,000
          customers for systems in Evansville and Jasper, Indiana serving
          approximately 63,000 customers. Simultaneously with this transaction,
          we contributed systems serving approximately 160,000 Indiana customers
          and affiliates of AT&T Broadband contributed systems serving
          approximately 162,000 Indiana customers to a joint venture known as
          Insight Communications of Indiana, LLC in which we and AT&T Broadband
          each received a 50% interest. Insight Indiana is the largest cable
          operator in Indiana.

     .    Kentucky Joint Venture. In October 1999, we completed the purchase of
          a combined 50% interest in InterMedia Capital Partners VI, L.P. from
          related parties of Blackstone Capital, InterMedia Capital Management
          VI, LLC and a subsidiary and related party of AT&T Broadband. The
          Kentucky systems serve approximately 432,000 basic customers
          throughout Kentucky. At the same


                                       15
<PAGE>

          time, we also completed our agreements with AT&T Broadband and its
          affiliates pursuant to which we each own a 50% interest in, and we
          manage and operate, both the Indiana and Kentucky systems. Insight
          Kentucky is the largest cable operator in Kentucky.

     One of our original investors was Continental Cablevision, the third
largest cable operator in the United States at that time. After MediaOne
acquired Continental, we reached an agreement to repurchase its interest in our
company by the end of 1999. We replaced this important relationship by acquiring
the Indiana and Kentucky systems in our 50/50 joint venture with affiliates of
Tele-Communications, Inc., now known as AT&T Broadband, LLC, the largest cable
operator in the United States, after the completion of its proposed acquisition
of MediaOne. We believe that a relationship with a major cable operator is an
advantage to us because it helps us to participate in the rapidly changing
technical developments in the industry and allows us to procure programming,
equipment and services at better prices. We already have benefited from our new
AT&T Broadband relationship through our agreement in principle with AT&T for the
delivery of voice telecommunication services. We also benefit from having two
nationally recognized financial investors, Vestar Capital Partners III, L.P. and
Sandler Capital Partners IV, L.P. This combination of strategic and financial
relationships gives us a clear view of the issues confronting the
telecommunications industry and increased access to capital, which we can
utilize when analyzing and pursuing new business opportunities.

Our Systems

     Our operations are conducted through the Indiana systems, the Kentucky
systems, the national systems and the Columbus system. Our Indiana and Kentucky
systems serve approximately 765,000 customers and represent approximately 81% of
our total customers. We receive tangible and intangible benefits from our
partnership with affiliates of AT&T Broadband, including (a) substantial
programming discounts and (b) participation in AT&T Broadband affiliate
meetings, which affords us in-depth knowledge and understanding about principal
and material issues and challenges facing the cable television industry.

     We are able to realize significant operational synergies due to the size of
our clustered systems and the demographic proximity of all of our systems. We
are in the process of rebuilding 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 will enable 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.

     The Indiana Systems

     General

     As of December 31, 1999, the Indiana systems passed approximately 512,800
homes and served approximately 332,600 customers. The Indiana systems are owned
by Insight Communications of Indiana, LLC, which is the largest cable operator
in the state. Insight Indiana, which was capitalized on October 31, 1998, was a
50/50 joint venture between us and an affiliate of AT&T Broadband until the
contribution of its equity interests on October 1, 1999 into Insight Midwest,
L.P., which is equally owned by us and an affiliate of AT&T Broadband. Through
our wholly-owned subsidiary, Insight Communications Company, L.P., we serve as
manager of the Indiana systems.


                                       16
<PAGE>

     The Scottsburg system and the Portland system, which are included in the
Indiana systems as discussed above, passed approximately 18,000 homes and served
approximately 10,100 customers as of December 31, 1999. Both of these systems
are wholly-owned by us but are managed by Insight Indiana.

     We believe that further rebuilding 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 rebuilding the network, activating
two-way transmission and combining headends. By the end of 2000, we expect that
96% of our customers in Indiana, including the customers of the managed Indiana
systems, will be served by three headends. Upon implementation of our
state-of-the-art technical platform, we will be deploying new services based on
our marketing strategy of bundling products. In addition, we believe that there
are additional opportunities to augment our position in the state through
additional acquisitions and swaps.

     The Indiana systems are organized in five management districts:

     The Central District

     As of December 31, 1999, the Central District passed approximately 77,800
homes and served approximately 60,000 customers, principally in the community of
Bloomington. The City of Bloomington, located 45 miles south of Indianapolis, is
the home of Indiana University. Besides the University, major employers include
United Technology and General Electric. The median household income for the area
is approximately $37,000 per year, while the median family income is
approximately $47,500 per year. Household income differs from family income by
including income from all persons in all households, including persons living
alone and other non-family households.

     Interactive digital video was launched in Bloomington by AT&T Broadband
prior to the formation of Insight Indiana. Upon completion of our rebuild, we
will migrate the Bloomington digital customers to our interactive Digital
Gateway service. The Bloomington system began deploying the Insight@Home service
during the first quarter of 2000. Bloomington and parts of Monroe County are
expected to be rebuilt to 750 MHz during the second quarter of 2000, with the
remainder of the district projected to be rebuilt to 750 MHz by the end of 2000.

     The Southwest District

     At December 31, 1999, the Southwest District passed approximately 120,000
homes and served approximately 67,000 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.

     A related party of Southern Indiana Gas and Electric Co. is overbuilding a
portion of our Southwest system. 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
Southern Indiana Gas and Electric Co. is currently offering cable service to an
estimated 20,000 homes in our service area and is expected to make the service
available to additional homes, and has commenced offering telephone and data
service. We responded to this competition by rebuilding the network to 750 MHz
and have introduced our interactive Digital Gateway service, including DIVA's
video-on-demand service and the LocalSource interactive information service. We
have also launched the Insight@Home service in Evansville.

     The Southwest system recently won a competitive bid to supply a data
network to the Evansville school system. We are working with TCI Network
Solutions to supply this data network and have signed a five-


                                       17
<PAGE>

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 Jeffersonville District

     As of December 31, 1999, the Jeffersonville District passed approximately
45,600 homes and served approximately 26,500 customers, principally in the
community of Jeffersonville. The Jeffersonville District is in the Louisville,
Kentucky metropolitan area, but our Louisville, Kentucky system was not part of
our Jeffersonville District as of December 31, 1999. Jeffersonville's economy is
largely influenced by Louisville, Kentucky's largest city, which has developed a
diverse economy by adding major service companies such as UPS and Columbia
Healthcare to its strong manufacturing base whose major employers include
General Electric and Ford Motor Company. The median household income for the
area is approximately $36,800 per year, while the median family income is
approximately $44,900 per year. Due to its geographic proximity, we intend to
integrate the Jeffersonville District with our Louisville, Kentucky system in
the spring of 2000 to achieve operational synergies.

     We launched Insight@Home in the Jeffersonville District in April 1999. We
have rebuilt the network to 750 MHz and plan to introduce our interactive
Digital Gateway service with the LocalSource product and the DIVA
video-on-demand service upon the integration of the Jeffersonville headend into
the Louisville headend in the spring of 2000.

     The Northwest District

     As of December 31, 1999, the Northwest District passed approximately
115,300 homes and served approximately 79,600 customers, principally in the
communities of Lafayette, Kokomo, Fowler and Hartford City. The City of
Lafayette is the home of Purdue University. Besides the University, major
employers include Great Lakes Chemical, Lafayette Life Insurance, General Motors
and Delco Remy. The median household income for the area is approximately
$39,900 per year, while the median family income is approximately $51,600 per
year.

     Most of the Lafayette, Kokomo, Fowler and Hartford City systems have been
rebuilt to 750 MHz, with a few areas being finished in 2000. We launched the
Insight@Home service in all of the markets. AT&T Broadband launched a digital
service in the Kokomo market in late 1998. We plan to migrate those customers to
our digital service in 2000, simultaneously with the launch throughout the
district of our interactive Digital Gateway service, including the LocalSource
product and DIVA's video-on-demand service.

     The Northeast District

     As of December 31, 1999, the Northeast District passed approximately
154,200 homes and served approximately 100,000 customers, principally in the
suburban communities near Indianapolis, including Anderson, Richmond 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
Lily 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 Northeast District is expected to be rebuilt to 750 MHz by the summer
of 2000. 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
plan to migrate those customers to our interactive Digital Gateway service
during 2000, simultaneously with the launch throughout the district of our
Digital Gateway service, including the


                                       18
<PAGE>

LocalSource product and DIVA's video-on-demand service.

     The Kentucky Systems

     General

     As of December 31, 1999, the Kentucky systems passed approximately 680,100
homes and served approximately 432,200 customers. 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, which is equally owned by us and an affiliate
of AT&T Broadband. Through our wholly-owned subsidiary, Insight Communications
Company, L.P., we serve as manager of the Kentucky systems.

     Over 95% of the 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 rebuild, 100% of Insight Kentucky's customers will
be served by a two-way active, 750 MHz, hybrid fiber coaxial network.
Additionally, following the consolidation of headends, 100% of the systems'
customers will be served by four headends. The rebuild and consolidation of
headends are expected to be completed by the end of 2000.

     Summary statistics for the Kentucky systems are as follows:

     Louisville

     As of December 31, 1999, the Louisville system passed approximately 385,500
homes and served approximately 241,500 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
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.

     The Louisville system is currently undergoing a rebuild and we intend to
serve all of its customers with two-way 750 MHz hybrid fiber coaxial cable by
December 31, 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 addition, we plan to integrate the Jeffersonville, Indiana District into the
Louisville system by the spring of 2000.

     InterMedia Capital Partners VI, L.P. launched its digital service in
Louisville in November 1998. The service already has approximately 12,400
customers in Kentucky. We plan to migrate these customers to our interactive
Digital Gateway service, including the LocalSource product and the DIVA
video-on-demand service concurrent with the integration of the Jeffersonville
District by the spring of 2000. The Louisville system recently launched the
Insight@Home service.

     Lexington

     As of December 31, 1999, the Lexington system passed approximately 118,800
homes and served approximately 83,900 customers from a single headend. Lexington
is Kentucky's second largest city, located in


                                       19
<PAGE>

the Blue Grass region, 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 is currently undergoing a rebuild and we intend to
serve all of its customers with two-way 750 MHz hybrid fiber coaxial cable by
September 30, 2000. InterMedia Capital Partners VI, L.P. launched its digital
service in Lexington in October of 1998 and achieved penetration levels of
approximately 16% in the areas where digital is available. We plan to migrate
these customers to our interactive Digital Gateway service, including the
LocalSource product and the DIVA video-on-demand service, by mid-year 2000. The
Lexington system has launched the Insight@Home service.

     Covington

     As of December 31, 1999, the Covington system passed approximately 126,700
homes and served approximately 73,300 customers from a single headend. Covington
is Kentucky's fifth largest city. Major employers in the Covington area include
Delta, 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 is currently undergoing a rebuild and is expected to
serve all of its customers with two-way 750 MHz hybrid fiber coaxial cable by
September 30, 2000. The Covington system recently launched the Insight@Home
service. Digital service is also available in Covington. We plan to migrate the
customers of this digital service to our interactive Digital Gateway service,
including the LocalSource product and the DIVA video-on-demand service, by
mid-year 2000.

     Bowling Green

     As of December 31, 1999, the Bowling Green system passed approximately
33,400 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 economic center for Southcentral
Kentucky and is the home of Western Kentucky University. Major employers in the
Bowling Green area include Fruit of the Loom, Camping World, Desa International
and Holley Replacement Parts. The median household income for the area is
approximately $36,500, while the median family income is approximately $45,400.

     The Bowling Green system is fully rebuilt to two-way 750 MHz hybrid fiber
coaxial cable. Recently, digital and Insight@Home services have been launched in
Bowling Green. We plan to migrate the customers of this digital service to our
interactive Digital Gateway service, including the LocalSource product and the
DIVA video-on-demand service, by late 2000.

     Carrollton

     As of December 31, 1999, the Carrolton system passed approximately 4,500
homes and served approximately 2,500 customers from a single headend. Major
employers in the Carrollton area include Dow Corning, Elf-Atochem, Meritor,
North American Stainless, and Celotex. The median household income for the area
is approximately $27,000, while the median family income is approximately
$32,900.

     The Carrollton system is currently undergoing a rebuild and is expected to
serve all of its customers with two-way 750 MHz hybrid fiber coaxial cable by
year end 2000.


                                       20
<PAGE>

     The National Systems

     The national systems passed approximately 151,200 homes and served
approximately 86,600 customers on December 31, 1999. The national systems have
three major clusters: Rockford, Illinois; Griffin, Georgia; and Claremont,
California.

     Rockford, Illinois

     As of December 31, 1999, the Rockford system passed approximately 101,000
homes and served approximately 64,700 customers from a single headend. 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.

     Immediately after acquiring the system in January 1998, we began rebuilding
the existing channel-bound, 42 channel system to 750 MHz, and our rebuilding
efforts were completed in 1999. We have added 11 analog channels and have
launched our interactive Digital Gateway service and introduced the Insight@Home
high-speed data service during 1999.

     Griffin, Georgia

     As of December 31, 1999, the Griffin system passed approximately 19,600
homes and served approximately 13,100 customers from a single headend. Major
employers in the area include Springs Industries, NACOM 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 our customers. Being a smaller market
that still has unused channel capacity, we launched a scaled-down version of our
Digital Gateway service, similar to our full digital service except that it is
not interactive. Despite a more limited product offering, we have achieved
significant success with over 16% penetration within twelve months of launch
generating incremental revenue per month of over $17.45 per digital customer.
The Griffin launch was the first digital deployment of our multi-tiered approach
in the country. We have no current plans to launch Insight@Home in the Griffin
market. Instead of launching a fully two-way data service, we are considering a
cable modem technology that will utilize telephone lines for upstream
communications.

     Claremont, California

     As of December 31, 1999, the Claremont systems passed approximately 30,600
homes and served approximately 8,800 customers from three headends. The largest
portion of the system is in Claremont, which is located 30 miles east of Los
Angeles on the lower slopes of the San Gabriel Mountains. The community is
primarily residential with about 90% of the city's structures used as
residences. Claremont is the home of the Claremont Colleges, which includes
Claremont McKenna College, Harvey Mudd College, Pitzer College, Pomona College,
Scripps College and the Claremont Graduate University. The community has very
attractive demographics, with more than 50% of the residents holding a
bachelor's degree and a graduate or professional degree. Besides the Colleges,
major employers in the Claremont area include the Claremont Unified School
District, Bausch & Lomb and Hi-Rel Connectors, Inc. The median household income
for the area is approximately $38,200 per year, while the median family income
is approximately $42,400 per year. The smaller portion of the system serves
Artesia and Bell/Cudahy, California, which are also located east of Los Angeles.


                                       21
<PAGE>

We are currently contemplating a digital launch in Claremont which will be
similar to our digital launch in Griffin, Georgia.

     The Columbus System

     As of December 31, 1999, the Columbus system passed approximately 178,300
homes and served approximately 84,200 customers from a single headend. The
system is located in the eastern portion of the City of Columbus and surrounding
suburban communities. We own 75% of the non-voting common membership interests
of Insight Communications of Central Ohio, LLC, the entity that was formed to
acquire the Columbus system. Coaxial Communications owns the remaining 25% of
the non-voting common membership interests and 100% of the voting preferred
membership interests. We serve as manager of Insight Ohio and of the three
shareholders of Coaxial Communications.

     The City of Columbus is the 34th largest designated market area, is the
capital of Ohio and is 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 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.

     The Columbus system enjoys a high level of population growth in the
suburban communities east of Columbus. Since December 31, 1996, more than 17,200
homes passed have been added to the Columbus system through network extensions,
primarily in new housing developments. This represents a 3.5% compound annual
growth rate of homes passed for the Columbus system for the three years ended
December 31, 1999, as compared to the industry average of 1.0% for the same
period.

     In 1996, Ameritech obtained a citywide cable television franchise for the
City of Columbus. 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 distinct areas and therefore do not compete
with one another. The areas of the Columbus system served by both Insight and
Ameritech pass approximately 124,700 homes, representing 70% of the Columbus
system's total homes passed.

     We are currently rebuilding the Columbus system to 870 MHz, and began
servicing customers from our rebuilt network in November 1999. We are currently
launching our interactive Digital Gateway service, on a node-by-node basis,
including DIVA's video-on-demand service and the LocalSource interactive
information service. We have entered into an Affiliation Agreement with Road
Runner and a Network Service Agreement with High Speed Access Corp. to deploy
the Road Runner high-speed data service. The Road Runner service is currently in
the beta testing phase and management expects to launch this service during the
second quarter of 2000. In addition, the Columbus system provides exclusive
sports programming under the "Central Ohio Sport!" brand, featuring sporting
events from Ohio State University.

     When we acquired the Columbus system, we implemented a strategy to end deep
discounting as a defense against Ameritech. We believed that a relatively small
customer loss, caused by discontinuing discounts, would be preferable in
exchange for increasing the average monthly revenue per customer. As a result of
this strategy, from June 30, 1998 to December 31, 1999, the average monthly
revenue per customer increased from approximately $43.30 to $45.33, while the
number of customers decreased from approximately 91,100 to 84,200. Ameritech
seems to have responded to this strategy by recently announcing a $1.25 increase
in the price of their standard cable service effective March 1, 2000.


                                       22
<PAGE>

     As with our national, Indiana and Kentucky systems, we intend to launch a
voice telecommunication alternative to Ameritech through our proposed
arrangement with AT&T. Time Warner, the other major cable television provider in
the market, also has previously announced that it is negotiating a telephony
agreement with AT&T.

Customer Rates

     Rates charged to customers vary based on the market served and service
selected. As of December 31, 1999, our average monthly fee was approximately
$11.93 for basic service and an additional monthly fee ranging from $10.15 to
$21.81 for Classic service. As of December 31, 1999, the weighted average
revenue, including special promotions, for our monthly combined basic and
Classic service was approximately $27.28, which is below the national average of
$28.92 for the same services as of December 31, 1999, 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

     We seek to increase customer penetration levels for our basic service,
Classic service, premium channels and enhanced products and services through a
variety of marketing, branding and promotional strategies. We also seek to
maximize our revenue per customer through the use of packaging strategies to
market premium services and to develop and promote niche programming services.
We regularly use targeted telemarketing, cross channel TV spots and direct mail
campaigns to sell these packages and services 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.

     Prior to the introduction of telecommunication service through our proposed
agreement with AT&T, we intend to aggressively pursue co-marketing campaigns
with AT&T. We launched a campaign in Evansville, Indiana where customers
subscribing to the digital service who are also AT&T long distance customers
realize


                                       23
<PAGE>

savings off of their cable and long distance bills. We expect to rollout similar
programs in other systems until we are able to provide the complete package of
entertainment, information and telecommunication products on a bundled basis.

Programming Supply

     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 platforms. We have continued to leverage both our systems'
analog rebuilds 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 Indiana and Kentucky systems directly
through AT&T Broadband's programming supplier Satellite Services, Inc. We
believe that Satellite Services has attractive programming costs. Additionally,
given the clustering of our systems in the Midwest, we have been successful in
affiliating with regionally based programming products, such as sports and news,
at lower than average license fees.

Commitment to Community Relations

     We believe that maintaining strong community relations will continue to be
an important factor in ensuring our long-term success. Our community-oriented
initiatives include educational programs and the sponsorship of programs and
events recognizing 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 the operations of
Insight 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
telecommunications 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.

     Our Griffin, Georgia system has received the Star Award from the Cable
Association of Georgia for the production and airing of "Stay in School" and
"Parents Volunteer" public service announcements. The Rockford, Illinois system
received awards and recognition from 13 community organizations in 1998. Cable
industry recognition and awards for excellence in marketing and programming have
been received by several of our systems including the Columbus system and 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.


                                       24
<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. For
example, our Columbus, Ohio system has teamed up with its neighboring cable
operator Time Warner to develop a local sports package called "Central Ohio
Sport!" which features Ohio State University sporting events on an exclusive
basis to cable customers. 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, 1999, we held 398 franchises in the aggregate,
consisting of 160 in the Indiana systems, 195 in the Kentucky systems, 15 in the
national systems and 28 in the Columbus system. 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.


                                       25
<PAGE>

     The following table summarizes information relating to the year of
expiration of our franchises as of December 31, 1999:

<TABLE>
<CAPTION>
                                                                                  Percentage of
Year of Franchise      Number of       Percentage of        Number of Basic        Total Basic
Expiration             Franchises     Total Franchises        Customers             Customers
----------             ----------     ----------------        ---------             ---------

<S>                       <C>             <C>                  <C>                   <C>
Expired                     1               0.3%                 2,807                 0.3%
2000                       27               6.8                 47,713                 5.1
2001                       19               4.8                 17,775                 1.9
2002                       20               5.0                 49,584                 5.3
2003                       27               6.8                 55,197                 5.9
After 2003                304              76.3                762,467                81.5
                          ---             -----                -------               -----
Total                     398             100.0%               935,543               100.0%
</TABLE>

     The Cable Act provides, 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 Act 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 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. Currently, our most significant wireline competition is
from a related party of Ameritech Corporation, which has been awarded cable
franchises in the Columbus, Ohio metropolitan area that are currently served by
us as the incumbent cable operator. 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


                                       26
<PAGE>

Internet, as well as data and other non-video services. The ability of local
exchange telephone companies to cross-subsidize video, data and
telecommunication services also poses some threat to cable operators.

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

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

     Direct broadcast television systems use digital video compression
technology to increase the channel capacity of their systems. Direct broadcast
satellite television system 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, and medium-power service is being
provided by PrimeStar, Inc. DIRECTV recently acquired PrimeStar's medium-power
direct broadcast satellite business and United States Satellite Broadcasting.
These and other recently announced transactions have resulted in DIRECTV and
EchoStar obtaining additional high-power channel capacity of direct broadcast
satellite television systems through the acquisition of other direct broadcast
satellite television system facilities and channel capacity. DIRECTV and
EchoStar have thereby significantly increased the number of channels on which
they can provide programming to customers. Direct broadcast satellite television
systems have some advantages over cable systems that were not rebuilt, such as
greater channel capacity and digital picture quality. In addition, legislation
has recently been enacted which permits direct broadcast satellite television
systems to deliver television stations in their local markets. The disadvantages
of direct broadcast satellite television systems currently include expensive
up-front customer equipment and installation costs and a lack of local
programming and service.

     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 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.

     Cable operators also compete with wireless program distribution services
such as analog and digital multichannel, multipoint distribution service, which
use microwave frequencies to transmit video programming


                                       27
<PAGE>

over-the-air to customers. There are operators of multipoint multichannel
distribution systems who are authorized to provide or are providing broadcast
and satellite programming to customers in areas served by our cable systems.

     Additionally, the FCC adopted regulations allocating frequencies in the 28
GHz band for a new service called local multipoint distribution service that can
be used to provide video services similar to multipoint multichannel
distribution systems. The FCC held spectrum auctions for local multipoint
distribution service licenses in 1998 and 1999.

     As we expand our offerings to include local telephone services, we 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 local telephone
service areas.

     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.

     The most competitive alternatives to the incumbent cable operator are
operators of direct broadcast satellite systems, operators of multipoint
distribution systems and direct wireline overbuilders.

     .    Direct broadcast satellite television systems have more channels and
          better picture and sound quality over cable operators who have not
          rebuilt their systems nor added digital. 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 are more expensive than cable, especially if it is desired to
          be on more than one TV in the household. Finally, direct broadcast
          satellite television systems do not have the same full two-way
          capability, which we believe will limit its ability to compete in a
          meaningful way in high-speed data and voice telecommunication.

     .    Multipoint multichannel distribution systems offers a lower cost
          alternative to direct broadcasting satellite television systems, but
          serious transmission limitations caused by the need to have line of
          sight access to customers have hampered its growth. Multipoint
          multichannel distribution systems are also not currently capable of
          delivering a fully two-way alternative to cable's high-speed data and
          has no immediate plans to deliver voice telecommunication. Hybrid
          platforms, using the telephone for upstream, have speed and technical
          limitations when compared to a broadband network.

     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.


                                       28
<PAGE>

Industry

     Overview

     As of December 31, 1999, approximately 96.6 million U.S. households had
access to, or were passed by, cable television. In the aggregate, these cable
systems serve approximately 67.3 million customers, representing a penetration
of 69.7% of the homes passed. The cable industry has grown steadily from
approximately 57.2 million basic customers in the United States in 1993 to
approximately 67.3 million as of December 31, 1999, with a projected growth to
73.7 million basic customers by the end of 2009, representing a compound annual
growth rate of 1.1%. It is estimated that the annual revenues received from U.S.
cable customers exceeded $36.9 billion in 1999.

     Cable television continues to evolve. The enactment in February 1996 of the
sweeping telecommunications reform law, the first comprehensive revision of the
federal telecommunications laws since 1934, is having a dramatic impact on the
industry's development. As the new law opens up local telephone markets to
competition for the first time and brings regulatory relief and flexibility to
cable companies, we believe the new law will continue to facilitate growth of
the cable industry. Significant investments in new infrastructure and services
are being made as cable companies enter new businesses in addition to the
conventional cable business.

     Many cable operators are rebuilding their infrastructure to deliver new
technologies, products and services to provide their customers with greater
value and choices in the face of growing competition in their core businesses.
Modern network architecture now can connect customers to a broadly enhanced
range of video, voice and high-speed data communication possibilities, as well
as improved signal reliability, better quality and superior two-way transmission
capability. Cable operators spent over $20.0 billion from 1996 to 1998,
including $7.7 billion in 1998 alone, to rebuild their network in order to
create new capability for the delivery of more channels, digital and high
definition television programming and two-way interactive services. It is
estimated that 86% of cable homes are passed by activated two-way plant, with
53% of such homes passed by systems with 750 MHz or higher capacity.

     According to the 1999 FCC Report on Competition, as of October 1999, 64.2%
of all cable subscribers were served by systems with more than 54 channels and
4.8% of subscribers received greater than 91 channels. As cable continues to
expand its channel capacity, we expect that the industry's competitive position
relative to direct broadcast satellite television systems and other multichannel
video providers should be further enhanced.

     The core businesses of cable television are subject to increasing
competition. Satellite, wireless and wireline competitors are increasing their
market share in the delivery of multichannel programming. During the past five
years, alternative providers have increased their share of the multichannel
market to nearly 15.0% of the total number of households with televisions.
During this period, cable television has increased its penetration to 69.7% of
the homes passed from 63.1% as the overall market has increased due to
population growth as well as increased awareness of multichannel distribution.
Meanwhile, cable operators are rebuilding their networks in order to begin
competing in other telecommunications and entertainment services. A brief
explanation of some of the major new businesses under development is described
below.


                                       29
<PAGE>

     Digital Video

     Cable companies are using their rebuilt digital networks to offer a wide
array of new broadband video services to customers. Through the use of
compressed digital video technology, which converts, on average, one analog
channel into a digital format and compresses such signal into 8 to 12 digital
channels, cable operators are able to greatly increase their channel offerings.
The digitally compressed signal is uplinked to a satellite, which sends the
signal back down to a cable system's headend to be distributed, via optical
fiber and coaxial cable, to the customer's home. At the home, a set-top video
terminal converts the digital signal back into analog channels that can be
viewed on a normal television set. We believe the implementation of digital
technology will significantly enhance the quantity and quality of channel
offerings, allowing the cable operator to offer video-on-demand, premium
services, incremental special interest programming and interactive informational
services.

     As of December 31, 1999, an estimated 5.1 million homes subscribed to a
digital cable service. The number of digital service customers is expected to
increase approximately 100% to 10.6 million homes by the end of 2000,
representing a penetration of 10.9% of the homes passed, and to approximately
50.1 million homes by 2009, representing a penetration of 47.2% of the homes
passed.

     High-Speed Data

     The broad bandwidth of 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 among our customers. 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 1998, cable companies delivered Internet services into over 100 markets
throughout the United States. At December 31, 1999, approximately 19.0 million
homes were passed by cable systems offering high-speed, residential cable
Internet services, which is projected to increase to approximately 39.0 million
homes by the end of 2000, and to more than 67.0 million homes by 2005.

     Over 1.6 million cable customers currently subscribe to cable access to the
Internet. The number of cable high-speed data service customers is expected to
increase more than 100% to approximately 3.3 million homes by the end of 2000,
representing a penetration of 4.9% of basic customers that will have been
marketed this service. It is further expected that data service customers will
increase to approximately 18.6 million homes by the end of 2009, representing a
penetration of 25.2% of basic customers that will have been marketed this
service.

     The cable industry also has developed standards so that inter-operable,
non-proprietary cable modems were made available in retail outlets beginning in
the second half of 1999. Such availability allows customers to use their modems
in different systems while decreasing our need to maintain an inventory of such
equipment. In March 1998, the Data Over Cable Service Interface Specifications
created by Cable Television Laboratories, Inc. and others was approved by the
International Telecommunications Union as an international standard for
transmitting data over cable systems. CableLabs also established a formal
certification process for


                                       30
<PAGE>

cable modem equipment suppliers to obtain a compliance certificate for their
data delivery devices based on this standard.

     Telecommunications

     During the last several years, the cable industry has been developing the
capability to provide telecommunication services. At least seven of the nation's
largest cable operators now offer residential and/or commercial phone service in
more than 25 markets overall and cable companies have reached interconnection
agreements in 40 states and the District of Columbia. At December 31, 1999, it
is estimated that there were 230,000 cable telephony customers, representing a
penetration of 8.0% of the homes that have been marketed this service.

     Recent developments, including AT&T's purchase of TCI and the proposed
telephony ventures between AT&T and Insight and Time Warner, and AT&T's pending
acquisition of MediaOne, will likely accelerate the pace of development of the
voice telecommunication business. The number of cable telephony customers is
expected to be approximately 620,000 homes by the end of 2000, representing a
penetration of 9.0% of the homes that will have been marketed this service and
approximately 25.4 million homes by 2009, representing a penetration of 38.0% of
the homes that will have been marketed this service.

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.

     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,


                                       31
<PAGE>

maintenance of various records, and antenna structure notification, marking and
lighting. The FCC has the authority to enforce these regulations through the
imposition of substantial fines, the issuance of cease and desist orders and/or
the imposition of other administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities often used in
connection with cable operations. A brief summary of certain of these federal
regulations as adopted to date follows.

     Rate Regulation

     The 1984 Cable Act codified existing FCC preemption of rate regulation for
premium channels and optional non-basic program tiers. The 1984 Cable Act also
deregulated basic cable rates for cable television systems determined by the FCC
to be subject to effective competition. The 1992 Cable Act substantially changed
the previous statutory and FCC rate regulation standards. The 1992 Cable Act
replaced the FCC's old standard for determining effective competition, under
which most cable television systems were not subject to rate regulation, with a
statutory provision that resulted in nearly all cable television systems
becoming subject to rate regulation of basic service. The 1996 Telecom Act
expands 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, after first receiving two
rate complaints from local customers, 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 rebuilds or upgrades.


                                       32
<PAGE>

     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 which exceed those produced by the
cost-of-service rules applicable to larger cable television operators. Once the
initial rates are set they can be adjusted periodically for inflation and
external cost changes as described above. When an eligible "small system" grows
larger than 15,000 basic customers, it can maintain its then current rates but
it cannot increase its rates in the normal course until an increase would be
warranted under the rules applicable to systems that have more than 15,000
customers. When a "small cable company" grows larger than 400,000 basic
customers, the qualified systems it then owns will not lose their small system
eligibility. If a small cable company sells a qualified system, or if the
company itself is sold, the qualified systems retain that status even if the
acquiring company is not a small cable company. We were a "small cable company"
prior to the October 30, 1998 completion of the AT&T Broadband joint venture
relating to our Indiana systems, 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:
(a) a 50 mile radius from the station's city of license; or (b) 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 Insight, 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
has initiated 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.


                                       33
<PAGE>

     Deletion of Certain Programming

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

     Franchise Fees

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

     Renewal of Franchises

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


                                       34
<PAGE>

     Channel Set-Asides

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

     Ownership

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

     The 1996 Telecom Act generally prohibits local exchange carriers from
purchasing any ownership interest in a cable television system exceeding 10%
located within the local exchange carriers 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 makes several other changes to relax ownership
restrictions and regulations of cable television systems. The 1996 Telecom Act
repeals 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 amends 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.


                                       35
<PAGE>

     Pursuant to the 1992 Cable Act, the FCC has imposed limits on the number of
cable television systems which a single cable television operator can own. In
general, no cable television operator can have an attributable interest in cable
television systems which serve more than 30% of all multi-channel video
programming distributors nationwide. Attributable interests for these purposes
include voting interests of 5% or more, non-voting interests of 33% or more of
the total assets (debt plus equity), officerships, directorships and general
partnership interests. The FCC has stayed the effectiveness of its horizontal
ownership rules pending the outcome of the appeal from the U.S. District Court
decision holding the multiple ownership limit provision of the 1992 Cable Act
unconstitutional.

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

     Access to Programming

     The 1992 Cable Act imposed restrictions on the dealings between cable
operators and cable programmers. Of special significance from a competitive
business posture, the 1992 Cable Act precludes video programmers affiliated with
cable companies from favoring their affiliated cable operators 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.

     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.


                                       36
<PAGE>

     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 to
rely on the marketplace. Pursuant to the 1992 Cable Act, the FCC has adopted
rules to assure the competitive availability to consumers of customer premises
equipment, such as converters, used to access the services offered by cable
television systems and other multichannel video programming distributors.
Pursuant to those rules, consumers are given the right to attach compatible
equipment to the facilities of their multichannel video programming distributors
so long as the equipment does not harm the network, does not interfere with the
services purchased by other customers and is not used to receive unauthorized
services. As of July 1, 2000, multichannel video programming distributors, other
than operators of direct broadcast satellite television systems, 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 emergency alert system
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.


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<PAGE>

     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 recently
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 new order may limit the extent to which multiple dwelling unit
owners may enforce certain aspects of multiple dwelling unit agreements which
otherwise would prohibit, for example, placement of direct broadcast satellite
television systems television receiving antennae in multiple dwelling unit
areas, such as apartment balconies or patios, under the exclusive occupancy of a
renter.

     Pole Attachments

     The FCC currently regulates the rates and conditions imposed by certain
public utilities for use of their poles unless state public service commissions
are able to demonstrate that they adequately regulate the rates, terms and
conditions of cable television pole attachments. A number of states and the
District of Columbia have certified to the FCC that they adequately regulate the
rates, terms and conditions for pole attachments. Illinois 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 will not begin until 2001, and will
be phased in by equal increments over the five ensuing years. The FCC recently
ruled that the provision of Internet services will not, in and of itself,
trigger use of the new formula. 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.

     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


                                       38
<PAGE>

television stations. Any future adjustment to the copyright royalty rates will
be done through an arbitration process to be supervised by the U.S. Copyright
Office. Cable television operators are liable for interest on underpaid and
unpaid royalty fees, but are not entitled to collect interest on refunds
received for overpayment of copyright fees.

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

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


                                       39
<PAGE>

the jurisdiction of centralized state governmental agencies, some of which
impose regulation of a character similar to that of a public utility. To date,
none of the states in which we currently operate has enacted state level
regulation.

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

     Internet Access Service

     We offer a service which enables consumers to access the Internet at high
speeds via high capacity broadband transmission facilities and cable modems. We
compete with many other providers of Internet access services which are known as
Internet service providers. 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. Also, the FCC denied
requests by certain Internet service providers that it condition its approval of
the merger of AT&T and TCI, now known as AT&T Broadband, LLC, on a requirement
that those companies allow access by Internet service providers to their
broadband facilities. Several local jurisdictions also are reviewing this issue.
Recently, a U.S. District Court in Oregon upheld 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. That decision has
been appealed. In the wake of this opinion, several other communities have begun
to consider whether to impose a similar requirement.

     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 by the United States Supreme Court in 1997.

     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 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 reasonable, competitively neutral
compensation for management of the public rights-of-way when cable operators
provide telecommunications service.


                                       40
<PAGE>

     We may in the future allow our cable infrastructure to be used for the
provision of local telecommunications services to residential and business
consumers. 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, we 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. Our ability to
successfully offer local telecommunications service will be dependent, in part,
on the opening of local telephone networks by incumbent local telephone
companies as required of them by the 1996 Telecom Act. 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
to open their local networks to competition. Also, as a result of that Supreme
Court decision, the FCC must determine what network elements of incumbent local
exchange carriers must be made available to other providers and under what
circumstances those elements must be made available. How the FCC resolves those
questions will impact our ability to provide local telecommunications service in
competition with incumbent local exchange telephone companies.

Employees

     As of December 31, 1999, we employed 1,745 full-time employees and 92
part-time employees. We consider our relations with our employees to be good.
Other than 21 employees, none of our employees is subject to a collective
bargaining obligation. Such 21 employees are represented by Local 4900 of the
Communications Workers of America, AFL-CIO-CLC. Their union contract expired on
October 30, 1998 and we are currently negotiating a new contract.

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; and

     .    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


                                       41
<PAGE>

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 rebuilding 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.

Item 3. Legal Proceedings

     Certain of the Insight Indiana and Insight Kentucky systems, as well as the
Utah systems which we transferred to an affiliate of AT&T Broadband, were named
in class actions in which the plaintiffs generally alleged that late fees
charged by the systems were not reasonably related to the costs incurred by the
cable systems as a result of the late payment. Plaintiffs sought compensation
from the systems for late fees charged in past periods. These actions were
settled in March 2000 pursuant to a settlement agreement entered into with the
defendants and their attorneys.

     Various local franchising authorities in the Kentucky systems filed basic
service rate orders requiring us to cease collecting state and local property
taxes from customers. We have announced that certain of our Kentucky systems
will grant a one-time credit to customers as a result of settlement agreements
with local franchising authorities. However, the Telecommunications Board of
Northern Kentucky has commenced administrative proceedings relating to such rate
order which we are vigorously defending. There can be no assurance that we will
enter into a similar settlement agreement in Northern Kentucky. As part of the
settlements, AT&T Broadband has agreed to reimburse the Kentucky systems for
rate refunds payable to customers in those communities subject to rate orders.

     Insight Kentucky and certain prior owners of the Kentucky systems,
including affiliates of AT&T Broadband, have been named in class actions
generally alleging that the Kentucky systems have improperly passed through
state and local property tax charges to customers. The plaintiffs in these
actions seek monetary damages and the enjoinment of the collection of such
taxes. Such class actions are (i) Alfred P. Sykes, Jr., Charles Pearl, Linda
Pearl vs. InterMedia Partners of Kentucky, L.P. and TCI TKR of Jefferson County,
Inc., which was filed on March 26, 1999 in Jefferson County Circuit Court and
consolidated with James F. Dooley vs. TCI TKR of Jefferson County and InterMedia
Partners of Kentucky, L.P., which was filed on March 24, 1999 in Jefferson
County Circuit Court, and (ii) Charles Shaw and Loretta Shaw vs. TCI TKR of
Northern Kentucky, Inc. TCI TKR of Southern Kentucky, Inc., TCI Cablevision of
North Central Kentucky, Inc., TCI Cablevision of Kentucky, Inc. and InterMedia
Partners of Kentucky, L.P., which was filed on June 4, 1999 in the Franklin
County Circuit Court. The classes have 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 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. We have filed motions to dismiss both the Jefferson County and Franklin
County actions. The Franklin County Court has denied such motion, and the denial
order is currently under reconsideration. The Jefferson County Court has yet to
issue an order with respect to such motion to dismiss. 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.


                                       42
<PAGE>

     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.

Executive Officers of the Registrant
------------------------------------

     The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
Name                      Age      Position
----                      ---      --------
<S>                       <C>      <C>
Sidney R. Knafel          69       Chairman of the Board

Michael S. Willner        48       President, Chief Executive Officer and Director

Kim D. Kelly              43       Executive Vice President, Chief Operating and
                                   Financial Officer, Secretary and Director

Elliot Brecher            34       Senior Vice President and General Counsel
</TABLE>

     Sidney R. Knafel has been our 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, CoreComm Limited, 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, our Chief Executive Officer, co-founded and has served
as our President 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. He serves on the board of C-SPAN and the
National Cable Television Association where he is a member of the Executive
Committee and serves as Treasurer. Mr. Willner is a graduate of Boston
University's College of Communication and serves on the school's Executive
Committee.

     Kim D. Kelly has been our Executive Vice President and Chief Financial
Officer since 1990. Ms. Kelly has also been our 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.

     Elliot Brecher has served as our Senior Vice President and General Counsel
since January 2000. He is of counsel to the law firm Cooperman Levitt Winikoff
Lester & Newman, P.C., which has served as our legal counsel for over the past
15 years. He joined that firm in February 1994 and served as a partner from
January


                                       43
<PAGE>

1996 until joining our company. 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.

     All executive officers serve at the discretion of the Board of Directors.


                                       44
<PAGE>

                                     PART II

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

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

<TABLE>
<CAPTION>
Quarter Ended                         High          Low
-------------                         ----          ---
<S>                                  <C>          <C>
September 30, 1999*                  $33.875      $25.250

December 31, 1999                    $31.250      $19.625
</TABLE>

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

     At February 29, 2000, there were approximately 159 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. Our
credit facility restricts 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 1999, we granted stock options to certain of
our employees to purchase an aggregate of 140,000 shares of Class A common
stock. The grants were not registered under the Securities Act of 1933 because
the stock options either did not involve an offer or sale for purposes of
Section 2(a)(3) of the Securities Act of 1933, in reliance on the fact that the
stock options were granted for no consideration, or were offered and sold in
transactions not involving a public offering, exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) and in compliance with Rule 506
thereunder.

     On November 11, 1999, we issued 838,420 shares of Class B common stock to
Kim D. Kelly, an executive officer, in exchange for her return to us of an
equivalent number of such shares. The exchange of shares was not registered
under the Securities Act of 1933 because it was made in reliance on an exemption
provided by Section 4(2) of the Securities Act of 1933 and Rule 506 thereunder
for transactions by an issuer not involving a public offering.


                                       45
<PAGE>

Item 6. Selected Financial Data

     In the table below, we provide you with selected consolidated historical
information and other operating data of Insight. We have prepared the
consolidated selected financial information using the consolidated financial
statements of Insight for the five years ended December 31, 1999. When reading
this Selected 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 the section titled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", also included herein.

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                                   -------------------------------------------------------------
                                                      1995         1996         1997         1998         1999
                                                   -------------------------------------------------------------
                                                               (dollars in thousands, except per share data)
<S>                                                <C>          <C>          <C>          <C>          <C>
Statement of Operations Data:
  Revenues                                         $  57,108    $  61,839    $  67,698    $ 112,902    $ 242,693
  Costs and Expenses:
    Programming and other operating costs             15,364       16,774       18,397       30,376       71,956
    Selling, general and administrative expenses      13,629       14,062       15,020       24,471       55,198
    Non cash compensation & related charges               --           --           --           --       19,285
    Depreciation and amortization                     13,937       15,694       18,125       43,849      131,308
                                                   -------------------------------------------------------------
                                                      42,930       46,530       51,542       98,696      277,747
                                                   -------------------------------------------------------------
  Operating income (loss)                             14,178       15,309       16,156       14,206      (35,054)
  Other income (expense):
    Gain on cable systems exchange                        --           --       78,931      111,746       15,799
    Gain on contribution of cable systems
      to joint venture                                    --           --           --       44,312           --
    Interest expense, net                            (17,965)     (17,644)     (15,962)     (28,106)     (50,398)
    Other expense                                       (815)          --           --         (444)        (345)
                                                   -------------------------------------------------------------
                                                     (18,780)     (17,644)      62,969      127,508      (34,944)
Income (loss) before minority interest and
    equity in losses of investees                     (4,602)      (2,335)      79,125      141,714      (69,998)
  Minority interest                                       --           --           --        3,410       31,339
  Equity in losses of investees                           --           --           --       (3,251)     (13,963)
                                                    -------------------------------------------------------------
  Income (loss) before income taxes and
    extraordinary item                                (4,602)      (2,335)      79,125      141,873      (52,622)
  Provision for income taxes                             --           --           --           --        31,586
                                                    -------------------------------------------------------------
  Income (loss) before extraordinary item             (4,602)      (2,335)      79,125      141,873      (84,208)
  Extraordinary loss from early extinguishment
     of debt                                              --         (480)      (5,243)      (3,267)          --
                                                   -------------------------------------------------------------
  Net Income (loss)                                   (4,602)      (2,815)      73,882      138,606      (84,208)
  Accretion of redeemable Class B
    common units                                          --           --           --       (5,729)      (7,118)
  Accretion to redemption value of
    preferred limited units                           (2,604)      (5,421)     (15,275)          --           --
                                                   -------------------------------------------------------------
  Net income (loss) applicable to
    common shareholders                            $  (7,206)   $  (8,236)   $  58,607    $ 132,877    $ (91,326)
                                                   =============================================================
  Basic income (loss) per share before
    extraordinary item                             $   (0.23)   $   (0.24)   $   2.02     $    6.71    $   (2.58)
  Diluted income (loss) per share before
    extraordinary item                             $   (0.23)   $   (0.24)   $   1.87     $    4.55    $   (2.58)
  Basic income (loss) per share                    $   (0.23)   $   (0.26)   $   1.86     $    6.55    $   (2.58)
  Diluted income (loss) per share                  $   (0.23)   $   (0.26)   $   1.78     $    4.61    $   (2.58)
</TABLE>


                                       46
<PAGE>

<TABLE>
<CAPTION>
                                                                      Year Ended December 31,
                                                ------------------------------------------------------------------
                                                   1995          1996          1997          1998          1999
                                                ------------------------------------------------------------------
                                                                      (dollars in thousands)
<S>                                             <C>           <C>           <C>           <C>           <C>
Other Financial Data:
  EBITDA (1)                                    $   27,300    $   31,003    $  113,212    $  213,828    $  129,084
  Adjusted EBITDA(2)                                28,115        31,003        34,281        58,055       115,539
  Adjusted EBITDA margin (3)                          49.2%         50.1%         50.6%         51.4%         47.6%
  Capital Expenditures                              15,154        16,414        27,981        44,794       135,929
  Net cash provided by operating activities         13,337        15,976        10,436        44,760        96,448
  Net cash used in investing activities            (15,120)      (16,589)      (27,981)     (142,190)     (516,487)
  Net cash provided by financing activities          1,600           870        17,891       116,250       513,648

Balance Sheet Data:
  Cash and cash equivalents                     $      479    $      738    $    1,082    $   19,902    $  113,511
  Property, plant and equipment, net                30,190        36,079        63,842       155,412       643,138
  Total assets                                      64,510        68,574       158,103       659,837     1,989,470
  Total debt                                       172,975       178,327       207,488       573,663     1,233,000
  Partners' (deficit)/stockholders' equity        (169,601)     (177,837)     (127,982)       (7,928)      588,060
</TABLE>


(1)  Represents earnings (loss) before interest, taxes, depreciation and
     amortization and extraordinary items. 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 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 the financial statements, including the
     Statements of Cash Flows, which are included later in this prospectus.

(2)  Represents EBITDA excluding any non-cash items such as 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.

(3)  Represents adjusted EBITDA as a percent of total revenues.

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

Introduction

     Because of corporate transactions completed over the past three years,
including the contribution agreement with AT&T Broadband LLC ("AT&T Broadband")
with respect to the Indiana systems and the acquisition of the Kentucky systems,
we do not believe the discussion and analysis of our historical financial
condition and results of operations below are indicative of our future
performance.

     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 Indiana and contributed all of our
Indiana systems, including the Evansville system, to Insight Indiana. At the
same time, AT&T Broadband contributed most of its Indiana systems to Insight
Indiana.

     On July 26, 1999, we completed our initial public offering of Class A
common stock. The offering net of underwriting discounts and other offering
expenses totaled approximately $607.0 million and were applied


                                       47
<PAGE>

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 were
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. (the "IPVI Partnership") 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.

General

     Substantially all of our historical revenues 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 earn
revenues from commissions for products sold through home shopping networks and,
since August 21, 1998, from management fees for managing Insight Communications
of Central Ohio, LLC.

Results of Operations

     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,
                                               ---------------------------------------
                                                  1997           1998           1999
                                               ---------      ---------      ---------
<S>                                            <C>            <C>            <C>
Revenue .................................      $  67,698      $ 112,902      $ 242,693
Costs and expenses:
  Programming and other operating costs .         18,397         30,376         71,956
  Selling, general and administrative ...         15,020         24,471         55,198
  Non-cash compensation & related charges             --             --         19,285
  Depreciation and amortization .........         18,125         43,849        131,308
                                               ---------      ---------      ---------
                                                  51,542         98,696        277,747
                                               ---------      ---------      ---------
Operating income (loss) .................         16,156         14,206        (35,054)

EBITDA ..................................        113,212        213,828        129,084
Adjusted EBITDA..........................         34,281         58,055        115,539
Interest expense ........................         15,962         28,106         50,398
Net income (loss) .......................         73,882        138,606        (84,208)
Net cash provided by operating activities         10,436         44,760         96,448
Net cash used in investing activities ...        (27,981)      (142,190)      (516,487)
Net cash provided by financing activities         17,891        116,250        513,648
</TABLE>


                                       48
<PAGE>

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
$62.3 million and accounted for 48.0% 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 7.3% 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 the Company 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 27.7% to $20.9 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 33.1% of the increase and the
additional systems contributed by AT&T Broadband on October 31, 1998 accounted
for approximately 38.5% of the increase. Excluding these transactions, these
SG&A costs increased by approximately 27.7% to $20.9 million, primarily
reflecting increased marketing activity associated with new product
introductions and increased corporate expenses.

     A one-time charge for non-cash compensation and related expenses of $19.3
million was recorded during 1999 in connection with the distribution of shares
of our common stock to management.

     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.


                                       49
<PAGE>

     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 Indiana 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 $57.9 million attributable to
acquisitions and the results discussed above. EBITDA represents earnings (loss)
before interest, taxes, depreciation and amortization and extraordinary item.
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 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 the Statement of Cash Flows for Insight Communications Company,
Inc. 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 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 Communications Company, L.P for our common
stock. In addition, the Company 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 Indiana during 1998.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

     Revenues increased 66.8% to $112.9 million for the year ended December 31,
1998 as compared to the prior year. The results were impacted by two significant
transactions including: (a) on January 22, 1998 we purchased the Rockford,
Illinois system which contributed $23.1 million of revenue during the year
accounting for 51.1% of the total increase in consolidated revenue, and (b) on
October 31, 1998, we completed an exchange and contribution agreement with AT&T
Broadband. Our 1998 results include revenue from our Utah systems, which were
exchanged as part of the joint venture with AT&T Broadband, for the first ten
months and for Insight Indiana for the last two months. The incremental revenue
generated from AT&T Broadband's contributed systems approximated $11.2 million
accounting for 24.8% of the consolidated revenue increase. In addition, revenues
increased as a result of internal customer growth, rate increases and growth in
advertising revenues. Excluding the systems contributed by AT&T Broadband,
revenues increased by approximately $6.2 million due to an increase of 8,760
customers on average, and by approximately $2.5 million attributable to customer
rate increases.

     Revenues per customer per month averaged $32.80 for the year compared to
$32.22 for the prior year primarily reflecting an increase in advertising
revenue per customer per month which averaged $1.60 during 1998 compared to
$0.43 in 1997. This helped offset the lack of growth in basic revenue per
customer which remained unchanged at $24.24 because of the Rockford system which
has lower revenue per customer per month


                                       50
<PAGE>

reflecting its limited channel offering. Following the completion of our planned
rebuild, rate increases will be implemented consistent with the expanded channel
offering which should result in an increase in the average revenue per customer
closer to the national average of $27.43.

     Programming and other operating costs increased 65.1% to $30.4 million for
the year ended December 31, 1998 as compared to the prior year. Excluding the
Rockford system and the Indiana systems contributed by AT&T Broadband, these
costs increased by 17.9% to $21.7 million, primarily as a result of increased
programming costs and additional programming carried by our systems.

     Selling, general and administrative expenses increased 62.9% to $24.5
million for the year ended December 31, 1998 as compared to the prior year
primarily reflecting increased marketing activity associated with new product
introductions and increased corporate expenses.

     Depreciation and amortization expense increased 141.9% to $43.8 million for
the year ended December 31, 1998 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.

     Operating income for the year ended December 31, 1998 was $14.2 million, a
12.1% decrease over the prior year, as a result of the items discussed above.

     EBITDA increased 88.9% to $213.8 million for the year ended December 31,
1998 as compared to the prior year reflecting gains on cable systems exchanges
and a contribution of cable systems to a joint venture which together accounted
for $77.1 million or 76.6% of this increase, plus acquisitions and the results
of the items described above. EBITDA represents earnings (loss) before interest,
taxes, depreciation and amortization and extraordinary item. 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 as an indicator of operating
performance or cash 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 the Statement of Cash Flows for Insight Communications Company,
L.P. for an analysis of net cash provided by operating activities, used in
investing activities and provided from financing activities.

     Interest expense increased 76.1% to $28.1 million for the year ended
December 31, 1998 compared to the prior year. The increase was primarily due to
higher average outstanding indebtedness related to acquisitions. Average debt
outstanding during 1998 was $344.0 million at an average interest rate of 8.2%.

     Net income increased 87.6% to $138.6 million for the year ended December
31, 1998 primarily reflecting gains related to system swaps aggregating $156
million. Excluding these one-time gains we generated a net loss totaling $17.4
million.

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
networks. Expenditures have primarily been used to rebuild and upgrade our
existing cable network, and in the future will be used for plant extensions, new
services, converters and system rebuilds. Historically, we have been able to
meet our cash requirements with cash flow from operations, borrowings under our
credit facilities, private equity and public sources.


                                       51
<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 other 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, we spent $135.9 million in capital
expenditures largely to support our network rebuild, digital converter purchases
and to a lesser extent, network extensions. For the year ended December 31,
1999, cash from operations totaled $96.4 million, which, together with
borrowings under our credit facilities, funded the above noted capital
expenditures.

     It is anticipated that during 2000, we will spend approximately $211.4
million in capital expenditures, exclusive of any capital expenditures required
for the deployment of telephony. We will be able to fund these capital
expenditures through cash generated from operations and borrowings under our
credit facilities. Included in the planned 2000 capital expenditures is $85.1
million for the upgrade of most of our Indiana and Kentucky cable television
systems, which will involve the wide deployment of fiber optics and other
capital projects associated with implementing our clustering strategy. The
amount of such capital expenditures for years subsequent to 2000 will depend on
numerous factors including the level of success in deploying our new services
which will impact the amount of capital we will need for digital converters and
other network service infrastructure to support demand for new products and
services.

     On November 17, 1999, we invested $13.0 million in our 50/50 joint venture
with Source Media, Inc. On the same date, we also acquired 842,105 shares of
Source Media common stock for $12.0 million and five-year warrants up to
purchase an additional 4,596,786 shares at an exercise price of $20.00 per
share. Source Media's common stock had a closing sale price per share of
$14.9375 as of March 24, 2000. On March 3, 2000, the joint venture sold certain
of its assets to Liberate Technologies for which each of we and Source Media
received 886,000 shares of Liberate common stock, which had a closing sale price
per share of $82.00 as of March 24, 2000.

     At December 31, 1999, we had aggregate consolidated indebtedness of $1.2
billion, including $1.0 billion outstanding under senior bank credit facilities.
The senior bank facilities consisted of:

     .    $140.0 million reducing revolver credit facility maturing in December
          2005, which supports our national systems, of which $1.0 million was
          outstanding;

     .    $550.0 million reducing revolving credit/term loan facility maturing
          in December 2006, which supports our Indiana systems, of which $470.0
          million was outstanding; and

     .    $675.0 million reducing revolving credit/term loan facility maturing
          in October 2006, which supports our Kentucky systems, of which $562.0
          million was outstanding.

     Each of the senior credit facilities is stand-alone, having a separate
lending group. The credit facilities for the Indiana and Kentucky systems are
non-recourse to us, and none of the three facilities has cross-default
provisions relating to each other. Each credit facility has different revolving
credit and term periods and contains separately negotiated, specifically
tailored covenants. The weighted average interest rates for amounts outstanding
under the Indiana and Kentucky senior credit facilities at December 31, 1999
were 8.13% and 8.52%. The facilities contain covenants restricting, among other
things, our ability to make capital expenditures, acquire or dispose of assets,
incur additional debt, pay dividends or other distributions, create liens on
assets, make investments and engage in transactions with related parties. The
facilities also require compliance with


                                       52
<PAGE>

certain financial ratios, require us to enter into interest rate protection
agreements and contain customary events of default.

     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. Interest on the notes is payable on
April 1 and October 1 of each year, commencing April 1, 2000. The indenture
relating to the senior notes imposes certain limitations on the ability of
Insight Midwest to, among other things, incur debt, make distributions, make
investments and sell assets.

     During March 2000, we determined that Insight Ohio's cash flow from
operations and amounts available under its credit facility may not be sufficient
to finance the operating, capital and debt service requirements of the system.
As such, we have provided a commitment letter to Insight Ohio to fund any
operating shortfall through the year 2000.

Impact of Recently Issued Accounting Standards

     In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which as amended by SFAS No. 137 is
effective for fiscal years beginning after June 15, 2000. The statement requires
us to recognize all derivatives on the balance sheet at fair value. Although we
have not completed our assessment of the impact of FASB No. 133 on our results
of operations and financial position, we do not anticipate that the adoption of
this statement will be material.

Inflation and Changing Prices

     Our systems' costs and expenses are subject to inflation and price
fluctuations. Although changes in costs can be passed through to customers, such
changes may be constrained by competition. We do not expect inflation to have a
material effect on our results of operations.

Year 2000 Compliance

     To date, costs incurred that were directly related to addressing the Year
2000 problem have not been material. We have reviewed our cable systems to
inventory our equipment and have sent letters to our programming suppliers and
other vendors. We have not used a consultant but have worked closely with AT&T
Broadband, adopting its Year 2000 program and to a large extent utilizing its
independent certifications. In addition, we have tested our billing system by
entering years such as 2001 and have determined it to be working properly.

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; however, 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, 1999, our
interest rate swap and collar agreements expire in varying amounts through 2002.


                                       53
<PAGE>

     The fair market value of our long-term debt approximates its carrying value
as it bears interest at floating rates of interest. As of December 31, 1999, the
estimated fair value of our interest rate swap and collar agreements was
approximately $7.2 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, 1999, we had hedged approximately $766.0 million, or
62.1%, of our borrowings under our all of our credit facilities. Accordingly, a
hypothetical 100 basis point increase in interest rates along the entire
interest rate yield curve would increase our annual interest expense by
approximately $3.5 million.

Item 8. Financial Statements and Supplementary Data

     Reference is made to pps. F-1 through F-31 comprising a portion of this
report.

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

     None.


                                       54
<PAGE>

                                    PART III


Item 10. Directors and Executive Officers of the Registrant

     Information called for by Item 10 is set forth under the heading "Executive
Officers of the Registrant" in Part I hereof and in "Election of Directors" in
our proxy statement relating to the 2000 Annual Meeting of Stockholders, which
is incorporated herein by this reference.

Item 11. Executive Compensation

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

Item 12. Security Ownership of Certain Beneficial Owners and Management

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

Item 13. Certain Relationships and Related Transactions

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


                                       55
<PAGE>

                                     PART IV

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

     (a)  Financial Statements:

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

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                        Page
                                                        ----
Report of Independent Auditors                          F-1

Insight Communications Company, Inc.
  Consolidated Balance Sheets as of
  December 31, 1998 and 1999                            F-2

Insight Communications Company, Inc.
  Consolidated Statements of Operations
  for the years ended December 31, 1997,
  1998 and 1999                                         F-3

Insight Communications Company, Inc.
  Consolidated Statements of Changes
  in Partners' Deficiency/Stockholders'
  Equity for the years ended December 31,
  1997, 1998 and 1999                                   F-4

Insight Communications Company, Inc.
  Consolidated Statements of Cash Flows
  for the years ended December 31, 1997,
  1998 and 1999                                         F-5

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


     (b)  Reports on Form 8-K:

     We did not file any reports on Form 8-K during the fourth quarter of the
year ended December 31, 1999.


                                       56
<PAGE>

     (c)  Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                   DESCRIPTION
------                   -----------
<S>        <C>

2.1        Asset Contribution Agreement by and among Insight Communications of
           Indiana, LLC, Insight Communications Company, L.P., UACC Midwest,
           Inc., TCI of Kokomo, Inc., TCI of Indiana, Inc., Heritage Cablevision
           Associates, a Limited Partnership, and TCI of Indiana Holdings, LLC,
           dated as of May 14, 1998(1)

2.2(a)     Contribution Agreement by and between Coaxial Communications of
           Central Ohio, Inc. and Insight Communications Company, L.P., dated as
           of June 30, 1998(1)

2.2(b)     Amendment to Contribution Agreement by and between Coaxial
           Communications of Central Ohio, Inc., and Insight Communications
           Company, L.P., dated as of July 15, 1998(1)

2.2(c)     Second Amendment to Contribution Agreement by and among Coaxial
           Communications of Central Ohio, Inc., Insight Communications Company,
           L.P. and Insight Holdings of Ohio, LLC, dated as of August 21,
           1998(1)

2.3        Asset Exchange Agreement by and among Insight Communications Company,
           L.P., TCI of Indiana, Inc. and UACC Midwest, Inc., dated May 14,
           1998(1)

2.4        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)

2.5        Contribution and Formation Agreement, dated April 18, 1999, between
           TCI of Indiana Holdings, LLC and Insight Communications Company,
           L.P.(1)

3.1        Restated Certificate of Incorporation of Registrant(1)

3.2        By-laws of Registrant(1)

10.1       1999 Stock Option Plan(1)

10.2       Fourth Amended and Restated Credit Agreement, dated as of December
           21, 1998, among Insight Communications Company, L.P., several lenders
           and The Bank of New York (the "Insight Credit Facility") with Waiver
           No. 1 and Amendment No. 1 dated as of December 21, 1998 and Waiver
           No. 2 and Amendment No. 2 dated as of December 31, 1998(1)

10.3       Waiver No. 3 and Consent No. 1 to the Insight Credit Facility dated
           June 30, 1999 (1)

10.4       Amendment No. 3 to the Insight Credit Facility dated June 30, 1999
           (1)

10.5       Amendment No. 4 to the Insight Credit Facility dated September 24,
           1999

10.6       Credit Agreement, dated as of October 30, 1998 (the "Indiana Credit
           Facility"), among Insight Communications of Indiana, LLC, several
           lenders and The Bank of New York(1)

10.7       Amendment to the Indiana Credit Facility dated September 24, 1999(2)

10.8       Revolving Credit Agreement, dated as of October 7, 1998, among
           Insight Communications of Central Ohio, LLC, several lenders and
           Canadian Imperial Bank of Commerce(1)

10.9       Amended and Restated Revolving Credit and Term Loan Agreement, dated
           October 1, 1999, among Insight Kentucky Partners I, L.P. (f/k/a
           InterMedia Partners Group VI, L.P.), and several lenders

10.10      Amended and Restated Operating Agreement of Insight Communications of
           Indiana, LLC dated as of October 1, 1999(2)

10.11      Amended and Restated Management Agreement by and between Insight
           Communications
</TABLE>


                                       57
<PAGE>

<TABLE>
<S>        <C>
           of Indiana, LLC and Insight Communications Company, L.P., dated as of
           October 1, 1999(2)

10.12      Operating Agreement of Insight Ohio by and among Coaxial
           Communications of Central Ohio, Inc., Insight Holdings of Ohio, LLC,
           Barry Silverstein, Dennis McGillicuddy and D. Stevens McVoy, dated as
           of August 21, 1998(1)

10.13      Management Agreement of Coaxial LLC by and among Coaxial LLC, Insight
           Holdings of Ohio, LLC and Barry Silverstein, dated as of August 21,
           1998(1)

10.14      Management Agreement of Coaxial DJM LLC by and between Coaxial DJM
           LLC, Insight Holdings of Ohio, LLC and Dennis McGillicuddy, dated as
           of August 21, 1998(1)

10.15      Management Agreement of Coaxial DSM LLC by and between Coaxial DSM
           LLC, Insight Holdings of Ohio, LLC and D. Stevens McVoy, dated as of
           August 21, 1998(1)

10.16      Parent Undertaking given by Insight Communications Company, L.P. for
           and in favor of Coaxial Communications of Central Ohio, Inc., Phoenix
           Associates, Coaxial LLC, Coaxial DJM LLC, Coaxial DSM LLC, Barry
           Silverstein, Dennis McGillicuddy and D. Stevens McVoy, dated as of
           August 21, 1998(1)

10.17      Operating Agreement of Insight Holdings of Ohio, LLC by and between
           Insight Communications Company, L.P. and Insight Holdings of Ohio,
           LLC, dated as of August 21, 1998(1)

10.18      Amended and Restated Limited Partnership Agreement of Insight
           Communications of Kentucky, L.P., dated as of October 1, 1999(2)

10.19      Management Agreement by and between Insight Kentucky Partners II,
           L.P. and Insight Communications Company, L.P., dated as of October 1,
           1999(2)

10.20      Limited Partnership Agreement of Insight Midwest, L.P., dated as of
           October 1, 1999(2)

10.21      Indenture relating to 93/4% senior notes of Insight Midwest, L.P.,
           dated as of October 1, 1999

10.22      Registration Rights Agreement, dated as of October 1, 1999, among
           Insight Midwest, L.P., Insight Capital, Inc. and the initial
           purchasers party thereto(2)

10.23(a)   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)

10.23(b)   Amendment, dated July 16, 1999 to the Letter Agreement(1)

10.24      Confirmation of Distributions, dated July 7, 1999, by ICI
           Communications, Inc.(1)

10.25      Amended and Restated Consulting Agreement, dated as of March 17,
           2000, by and between InterMedia Partners Southeast and Insight
           Communications Company, L.P.

21.1       Subsidiaries of the Registrant

27.1       Financial Data Schedule
</TABLE>

----------
(1)  Filed as an Exhibit to the Company's Registration Statement on Form S-1,
     Registration Statement No. 333-78293, under the Securities Act of 1933 and
     incorporated herein by reference.

(2)  Filed as an Exhibit to the Registration Statement on Form S-4 of Insight
     Midwest, L.P. and Insight Capital, Inc., Registration Statement No. 333-
     33540, under the Securities Act of 1933 and incorporated herein by
     reference.

                                       58
<PAGE>

                         Report of Independent Auditors

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

We have audited the accompanying consolidated balance sheets of Insight
Communications Company, Inc as of December 31, 1998 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, 1999. 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 Insight
Communications Company, Inc. at December 31, 1998 and 1999, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.



                                              /s/ Ernst & Young LLP


New York, New York
March 29, 2000




                                      F-1
<PAGE>

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



<TABLE>
<CAPTION>
                                                                                                                 December 31,
                                                                                                         1998               1999
                                                                                                  ---------------------------------
<S>                                                                                                  <C>                <C>
Assets
Cash and cash equivalents                                                                            $    19,902        $   113,511
Marketable securities                                                                                         --             21,650
Trade accounts receivable, net of allowance for doubtful accounts of $409 in 1998
   and $764 in 1999                                                                                        7,988             12,104
Due from affiliated companies                                                                              1,039                308
Prepaid expenses and other current assets                                                                  2,677             18,383
                                                                                                  ---------------------------------
   Total current assets                                                                                   31,606            165,956

Fixed assets, net                                                                                        155,412            643,138
Intangible assets, net                                                                                   462,355          1,140,117
Deferred financing costs, net of amortization of $143 in 1998 and $1,055 in 1999                           4,794             20,368
Investment in unconsolidated affiliates                                                                    6,749              5,991
Officer and employee loans receivable                                                                         --             13,900
                                                                                                  ---------------------------------
                                                                                                     $   660,916        $ 1,989,470
                                                                                                  =================================
Liabilities and partners' deficiency/stockholders' equity
Accounts payable                                                                                     $    24,290        $    67,996
Accrued expenses and other liabilities                                                                     2,671              9,431
Accrued property taxes                                                                                     1,397             12,620
Deferred revenue                                                                                           1,079              7,287
Due to affiliates                                                                                             88                 --
Interest payable                                                                                           7,661             19,415
                                                                                                  ---------------------------------
   Total current liabilities                                                                              37,186            116,749

Deferred income taxes                                                                                         --             33,529
Debt                                                                                                     573,663          1,233,000
                                                                                                  ---------------------------------
                                                                                                         610,849          1,383,278

Minority interest                                                                                          6,676             18,132

Redeemable Class B common units, 47,215,859 outstanding in 1998, net of issuance
   costs of $4,410                                                                                        51,319                 --

Partners' deficiency:
   General partner                                                                                          (528)                --
   Limited partners, 41,974,421 units issued and outstanding in 1998                                      (7,400)                --

Stockholders' equity:
Preferred stock, $.01 par value, 100,000,000 shares authorized, 0 shares issued and
   outstanding as of December 31, 1999                                                                        --                 --
Common stock, $0.01 par value:
   Class A - 300,000,000 shares authorized, 49,157,180 shares issued and
     outstanding as of December 31, 1999                                                                      --                492
   Class B - 100,000,000 shares authorized, 10,226,050 shares issued and
     outstanding as of December 31, 1999                                                                      --                102
Additional paid in capital                                                                                    --            656,486
Accumulated deficit                                                                                           --            (72,188)
Accumulated other comprehensive income                                                                        --              3,168
                                                                                                  ---------------------------------
                                                                                                          (7,928)           588,060
                                                                                                  ---------------------------------
                                                                                                     $   660,916        $ 1,989,470
                                                                                                  =================================
</TABLE>


See accompanying notes.

                                       F-2
<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                      Year ended December 31,
                                                                               1997             1998               1999
                                                                           ---------------------------------------------

<S>                                                                        <C>               <C>               <C>
Revenue                                                                    $  67,698         $ 112,902         $ 242,693

Costs and expenses:
   Programming and other operating costs                                      18,397            30,376            71,956
   Selling, general and administrative                                        15,020            24,471            55,198
   Non cash compensation and related charges                                      --                --            19,285
   Depreciation and amortization                                              18,125            43,849           131,308
                                                                           ---------------------------------------------
                                                                              51,542            98,696           277,747
                                                                           ---------------------------------------------
Operating income (loss)                                                       16,156            14,206           (35,054)

Other income (expense):
   Gain on cable systems exchange                                             78,931           111,746            15,799
   Gain on contribution of cable systems to joint venture                         --            44,312                --
   Interest expense, net                                                     (15,962)          (28,106)          (50,398)
   Other expense                                                                  --              (444)             (345)
                                                                           ---------------------------------------------
                                                                              62,969           127,508           (34,944)
                                                                           ---------------------------------------------
Income (loss) before minority interest and equity in losses of
   investees                                                                  79,125           141,714           (69,998)
Minority interest                                                                 --             3,410            31,339
Equity in losses of investees                                                     --            (3,251)          (13,963)
                                                                           ---------------------------------------------
Income (loss) before income taxes and extraordinary item                      79,125           141,873           (52,622)
Provision for income taxes                                                        --                --            31,586
                                                                           ---------------------------------------------
Income (loss) before extraordinary item                                       79,125           141,873           (84,208)
Extraordinary loss from early extinguishment of debt                          (5,243)           (3,267)               --
                                                                           ---------------------------------------------
Net income (loss)                                                             73,882           138,606           (84,208)
Accretion of redeemable Class B common units                                      --            (5,729)           (7,118)
Accretion to redemption value of preferred limited units                     (15,275)               --                --
                                                                           ---------------------------------------------
Net income (loss) applicable to common shareholders                        $  58,607         $ 132,877         $ (91,326)
                                                                           =============================================

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


See accompanying notes.


                                      F-3
<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.
                 CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS'
                        DEFICIENCY/STOCKHOLDERS' EQUITY
                             (dollars 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>
Balance at January 1, 1997                    $  (2,314)   $(175,523)                                                     $(177,837)
   Net income                                       739       73,143                                                         73,882
   Purchase of limited partner's
     interest                                        --      (10,250)                                                       (10,250)
   Purchase of warrants                              --          366                                                             366
   Accretion of preferred limited units            (153)     (15,122)                                                       (15,275)
   Depreciation of warrants                          --        1,132                                                          1,132
                                            ---------------------------------------------------------------------------------------
Balance at December 31, 1997                     (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 marketable
     securities                                                                                                $   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
                                            =======================================================================================
</TABLE>

See accompanying notes.


                                      F-4
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                           Year ended December 31,
                                                                                     1997            1998            1999
                                                                               --------------------------------------------
<S>                                                                               <C>             <C>             <C>
Operating activities
Net income (loss)                                                                 $  73,882       $ 138,606       $ (84,208)
Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:
     Depreciation and amortization                                                   18,125          43,849         131,308
     Non cash compensation                                                               --              --          18,715
     Equity in losses of investees                                                       --           3,251          13,963
     Gain on cable systems exchange                                                 (78,931)       (111,746)        (15,799)
     Gain on contribution of cable systems to joint venture                              --         (44,312)             --
     Extraordinary loss from early extinguishment of debt                             2,002           3,267              --
     Minority interest                                                                   --          (3,410)        (31,339)
     Provision for losses on trade accounts receivable                                  695           1,288           3,038
     Deferred income taxes                                                               --              --          31,328
     Other non cash items                                                               259              --            (149)
     Changes in operating assets and liabilities, net of the effect of
       acquisitions and dispositions:
       Trade accounts receivable                                                     (1,058)         (7,545)          7,225
       Due from and to affiliates                                                        12            (894)            731
       Prepaid expenses and other assets                                             (1,663)          1,707         (19,918)
       Accounts payable                                                               2,046          17,774          33,204
       Accrued expenses and other liabilities                                        (1,782)         (3,347)         (3,405)
       Interest payable                                                              (3,151)          6,272          11,754
                                                                               --------------------------------------------
Net cash provided by operating activities                                            10,436          44,760          96,448
                                                                               --------------------------------------------

Investing activities
Purchase of fixed assets                                                            (27,981)        (44,794)       (135,929)
Purchase of cable television systems, net of cash acquired                               --         (84,101)       (342,012)
Investment in equity investees                                                           --         (10,000)        (13,205)
Increase in intangible assets                                                            --          (3,295)         (9,209)
Investment in marketable securities                                                      --              --         (16,132)
                                                                               --------------------------------------------
Net cash used in investing activities                                               (27,981)       (142,190)       (516,487)
                                                                               --------------------------------------------

Financing activities
Net proceeds from initial public offering                                                --              --         606,994
Net proceeds from issuance of senior notes                                               --              --         192,288
Proceeds from borrowings under bank credit facility                                 140,252         753,900          22,000
Repayment of amounts due to Tele-Communications, Inc.                                    --        (214,532)             --
Principal payments on bank credit facility                                         (108,044)       (387,725)       (305,322)
Purchase of warrants                                                                   (320)            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                                              (10,250)        (16,486)             --
Debt issuance costs                                                                  (3,747)         (4,613)         (2,312)
                                                                               --------------------------------------------
Net cash provided by financing activities                                            17,891         116,250         513,648
                                                                               --------------------------------------------
Net increase in cash and cash equivalents                                               346          18,820          93,609
Cash and cash equivalents, beginning of year                                            736           1,082          19,902
                                                                               --------------------------------------------
Cash and cash equivalents, end of year                                            $   1,082       $  19,902       $ 113,511
                                                                               ============================================

Supplemental  disclosures of cash flow information:
Cash paid during the year for interest                                            $  19,103       $  21,834       $  45,299
                                                                               ============================================
</TABLE>
See accompanying notes.


                                      F-5
<PAGE>

                      INSIGHT COMMUNICATIONS COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1999


A.   Organization and Basis of Presentation

On July 26, 1999, Insight Communications Company, Inc. (the "Company") completed
an initial public offering ("IPO") of Class A common stock in which the Company
sold approximately 26,450,000 shares of its common stock. Offering proceeds net
of underwriting discounts and other offering expenses totaled approximately
$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, the Company operated as a limited
partnership. The Company was reconstituted as a corporation upon the completion
of the IPO, at which time all of the limited partnership's units were exchanged
for shares of common stock (Note J).

The Company owns and operates cable television systems in Kentucky, Indiana,
Illinois, Ohio, California and Georgia, as described below. The accompanying
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries, Insight Communications Company, L.P. ("Insight L.P.")
and Insight Interactive LLC. Insight L.P. owns and operates cable television
systems in Illinois, Indiana, California and Georgia. In addition, Insight L.P.
owns a 50% interest in Insight Midwest, L.P. ("Insight Midwest"), which through
its wholly-owned subsidiaries, Insight Communications of Indiana, 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
L.P. is the manager of Insight Midwest and effectively controls all operating
and financial decisions. Therefore, the accompanying consolidated financial
statements include the accounts of Insight Midwest.

Through its wholly-owned subsidiary, Insight Holdings of Ohio, LLC, Insight L.P.
owns a 75% non-voting equity interest in Insight Communications of Ohio, LLC
("Insight Ohio"), which operates cable television systems in the Columbus, Ohio
area (Note E). Insight L.P. accounts for its investment in Insight Ohio under
the equity method of accounting.

The Company's other wholly-owned subsidiary, Insight Interactive LLC ("Insight
Interactive") owns a 50% equity interest in SourceSuite LLC (Note F), which is
also accounted for under the equity method of accounting.

B. Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. As described above, the results of Insight
Midwest, which is 50% owned but effectively controlled by Insight L.P., are
included in the consolidated financial statements. The minority interest
liability represents AT&T Broadband's 50% ownership interest in Insight Midwest.
All significant 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 fees, connection fees, 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 to the extent of direct selling
costs incurred. Where material, any fees in excess of such costs are deferred
and amortized into income over the period that subscribers are expected to
remain connected to the system.

Use of Estimates

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

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Marketable Securities

Marketable securities consist of debt and equity securities (Note F). All
marketable securities 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 are included in interest income.

Fixed Assets

Fixed assets include amounts capitalized for labor and overhead expended in
connection with the installation of cable television systems and are stated at
cost. Depreciation for cable plant, furniture, fixtures, office equipment and
buildings is computed 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

                                      F-7
<PAGE>

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

B.   Significant Accounting Policies (continued)

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 fixed assets will not be recovered from the
undiscounted future cash flows of the Company, an impairment loss would be
recognized for the amount that the asset's carrying value exceeds its fair
value. Management believes that no material impairment of fixed assets existed
at December 31, 1999.

Intangible Assets

Intangible assets consist of franchise costs and goodwill. Costs incurred in
negotiating and renewing franchise agreements are capitalized and amortized over
the life of the franchise. Franchise rights acquired through the purchase of
cable television systems are amortized using the straight-line method over a
period of up to 15 years. Goodwill is amortized using the straight-line method
over a period of 40 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 the undiscounted future cash flows of the Company, an impairment loss would
be recognized for the amount that the asset's carrying value exceeds its fair
value. Management believes that no material impairment of intangible assets
existed at December 31, 1999.

Deferred Financing Costs

Deferred financing costs relate to costs, primarily legal fees and bank facility
fees, incurred to negotiate and secure bank loans (Note I). These costs are
being amortized on a straight-line basis over the life of the applicable loan.

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 the 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 the IPO. For 1999, diluted earnings per
share equals basic earnings per share as the Company 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.


                                      F-8
<PAGE>

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


B.   Significant Accounting Policies (continued)

Income Taxes

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, and in connection with the 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 L.P. for the
Company's common stock. See Note O.

Advertising Costs

The cost of advertising is expensed as incurred. For the years ended December
31, 1997, 1998, and 1999 advertising expense approximated $369,000, $702,000,
and $1.6 million, respectively.

Allocation of Profits and Losses

Prior to the exchange of common stock for the outstanding partnership interests
of Insight L.P., 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 years ended
December 31, 1997 and 1998 and for the period from January 1, 1999 to July 26,
1999, losses were allocated 1% to the General Partner for its interest and 99%
to the limited partners.

Recent Accounting Pronouncements

During 1999, the Company adopted Statement of Position 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" (SOP 98-1).
SOP 98-1 requires that companies capitalize qualifying costs incurred during the
application development stage of a software project. All other costs incurred in
connection with an internal use software project are to be expensed as incurred.
The adoption of SOP 98-1 did not have a material impact on the Company's
financial statements.

In June 1998, the FASB 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 all fiscal
years beginning


                                      F-9
<PAGE>

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


B.   Significant Accounting Policies (continued)

after June 15, 2000. SFAS No. 133 will require the Company to recognize all
derivatives on the balance sheet at fair value. Although management has not
completed its assessment of the impact of this standard on its results of
operations and financial position, management does not anticipate that adoption
of this standard will be material.

Reclassifications

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

C.   Acquisitions and Gain on Cable System Exchanges

Effective December 16, 1997, Insight L.P. exchanged its Phoenix, Arizona system
("Phoenix") servicing 36,250 subscribers for Cox Communications, Inc.'s
Lafayette, Indiana system ("Lafayette") servicing 38,100 subscribers. In
addition to the Lafayette system received, Insight L.P. received $12.6 million
in cash. This transaction has been accounted for by Insight L.P. as a sale of
Phoenix and a purchase of Lafayette. Accordingly, Lafayette has been included in
the accompanying consolidated balance sheets at fair value and Insight L.P.
recognized a gain of approximately $79 million on the sale of the Phoenix
system. The Lafayette purchase price was allocated to the cable television
assets acquired in relation to their fair values as increases in property and
equipment of $22.4 million and franchise costs of $56.6 million. Effective
November 1, 1998, Insight L.P. contributed the Lafayette system into Insight
Indiana (see Note D).

On January 22, 1998, Insight L.P. acquired a cable television system located in
Rockford, Illinois ("Rockford") for $97 million. This acquisition has been
accounted for as a purchase. Insight L.P. paid for the acquisition with
borrowings under its credit facility and with the $12.6 million of cash received
in the aforementioned Phoenix/Lafayette swap. 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. Purchase price adjustments for working capital acquired were not
significant. In connection with the Rockford acquisition, no non-current assets
or non-current liabilities were acquired. 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 L.P. 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 L.P. 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


                                      F-10
<PAGE>

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


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

accompanying consolidated balance sheets at $125 million (fair value of the Utah
systems) and Insight L.P. recognized a gain on the sale of the Utah systems of
approximately $112 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 million and franchise
costs of $101 million. Purchase price adjustments recorded for differences in
working capital between the Utah systems and the Evansville and Jasper systems
were not material. In connection with the Evansville and Jasper systems
exchange, no non-current assets or non-current liabilities were acquired.
Franchise costs arising from the acquisition of the Evansville and Jasper
systems are being amortized over a period of 15 years. In a simultaneous
transaction, the Jasper and Evansville systems were contributed by Insight L.P.
into Insight Indiana (Note D).

On March 22, 1999 Insight L.P. exchanged its Franklin, Virginia cable system
("Franklin") servicing approximately 9,100 subscribers for Falcon Cable's
Scottsburg ("Scottsburg") Indiana system servicing approximately 4,100
subscribers. In connection with the exchange, Insight L.P. received $8 million
in cash. Furthermore, on February 1, 1999, Insight L.P. exchanged its Oldham
Kentucky cable system ("Oldham") servicing approximately 8,500 subscribers for
Intermedia Partners of Kentucky L.P.'s Henderson, Kentucky cable system
("Henderson") servicing approximately 10,600 subscribers. These transactions
have been accounted for by Insight L.P. as sales of the Franklin and Oldham
systems and purchases of the Scottsburg and Henderson systems. Accordingly,
based upon the preliminary purchase price allocation, the Scottsburg and
Henderson systems have been included in the accompanying condensed consolidated
balance sheets at their fair values (approximately $31.3 million) and Insight
L.P. recognized a gain on the sale of the Franklin and Oldham systems of
approximately $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 L.P. 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 preliminary
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. Insight L.P. has accounted for the acquisition
of the Portland systems as a purchase. Insight L.P. paid for the acquisition
with borrowings under its credit facilities and with the $8 million of cash
received in the Franklin/Scottsburg system exchange described above.


                                      F-11
<PAGE>

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


D.   Insight Midwest

Insight Midwest was formed in September 1999 to serve as the holding company and
a financing vehicle for the Company's cable television system joint venture with
AT&T Broadband LLC (formerly Tele-Communications, Inc.) ("AT&T Broadband").
Insight Midwest is owned 50% by Insight L.P and 50% by AT&T Broadband, through
its indirect subsidiary TCI of Indiana Holdings, LLC. ("TCI"). On October 1,
1999 the Company's Indiana and Kentucky systems and operations were
contributed to Insight Midwest, as described further below. Through 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 749,000 customers as of
December 31, 1999.

Insight Indiana

On October 31, 1998 Insight L.P. and TCI contributed certain of their cable
television systems located in Indiana and Northern Kentucky (the "Indiana
systems") to Insight Indiana in exchange for 50% equity interests therein. The
cable television systems contributed to Insight Indiana by Insight L.P. included
the Jasper and Evansville systems that were acquired by Insight L.P. from TCI on
October 31, 1998 (Note C) and the Noblesville, Jeffersonville and Lafayette
systems already owned by Insight L.P. (the "Insight Contributed Systems").
Effective October 31, 1998, Insight L.P. entered into a management agreement
with Insight Indiana pursuant to which Insight L.P. agreed to manage the Indiana
systems for an annual fee of 3% of the gross revenues of the Indiana systems. On
October 1, 1999, as part of a joint venture restructuring, Insight Indiana
became a wholly owned subsidiary of Insight Midwest and amended its management
agreement with Insight L.P., confirming the 3% management fee. Such management
fee was approximately $685,000 and $4.4 million for the two months ended
December 31, 1998 and the year ended December 31, 1999, respectively, and is
eliminated in consolidation. In addition to managing the day-to-day operations
of the Indiana systems, Insight L.P. 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 L.P. and TCI.

In accordance with the foregoing, 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 the systems and their respective carrying
values ($89.1 million) as of October 31, 1998. In addition, the historical
values of the Insight Contributed Systems were increased by $44.3 million, an
amount equivalent to 50% of the difference between the fair value of such
systems and their respective carrying values as of October 31, 1998. The
aggregate step-up to fair value (including the step-up recorded in connection
with the acquisition of the Jasper and Evansville systems--Note C) was


                                      F-12
<PAGE>

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


D.   Insight Midwest (continued)

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 L.P. nor TCI is contractually
required to contribute additional capital to Insight Midwest and, because
Insight Midwest is a limited partnership, neither Insight L.P. nor TCI is liable
for the obligations of Insight Indiana or the Indiana systems.

Insight Kentucky

On October 1, 1999, Insight L.P. acquired a combined 50% interest in InterMedia
Capital Partners VI, L.P. (the "IPVI Partnership") 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 (the total debt of the IPVI
Partnership). 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"). 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, L.P. ("Insight Kentucky"), a third-tier subsidiary
partnership of Insight Midwest. Also on October 1, 1999, Insight L.P. entered
into a management agreement with Insight Kentucky, pursuant to which Insight
L.P. manages the Kentucky systems in consideration for a 3% management fee. Such
management fee was approximately $1.6 million for the three months ended
December 31, 1999 and is eliminated in consolidation. Similar to Insight
Indiana, in addition to managing the day-to-day operations of the Kentucky
systems, Insight L.P. is the general partner and effectively controls Insight
Midwest, including all of the operating and financial decisions pertaining to
the Kentucky systems. Insight Kentucky 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 Insight Kentucky have been valued based on the purchase price and
have been preliminarily allocated between fixed and intangible assets based on
management's 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
approximately $160.3 million and intangible assets of approximately $272.1
million. Fixed assets are being depreciated over their estimated useful lives
and intangible assets are being amortized over 15 years (Note B).


                                      F-13
<PAGE>

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

D.   Insight Midwest (continued)


The unaudited pro forma results of operations of the Company for the years ended
December 31, 1998 and 1999, 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):

<TABLE>
<CAPTION>
                                                        1998        1999
                                                        ----        ----
<S>                                                     <C>        <C>
Revenue                                               $375,682    $401,890
Loss before extraordinary item                         (78,101)   (122,457)
Net loss                                               (81,368)   (122,457)
Basic and diluted net loss per share                     (4.29)      (3.66)
</TABLE>

E.   Insight Ohio

On August 21, 1998, Insight L.P. 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 L.P. contributed to Insight Ohio $10 million in cash. As a result of the
Coaxial Contribution Agreement, Coaxial owns 25% of the non-voting common equity
and Insight L.P., through its subsidiary Insight Holdings of Ohio, LLC, owns 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 Interest in August 2006 and the Series B Preferred Interest on August
21, 2008. Coaxial has pledged the Series A Preferred Interest and Series B
Preferred Interest as security for $140 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"),
respectively. The Senior Notes and Senior Discount Notes are conditionally
guaranteed by Insight Ohio.

Insight Ohio was formed solely for the purpose of completing the aforementioned
transaction. Insight L.P., as manager of Insight Ohio, earns a management fee
from Insight Ohio equal to 3% of Insight Ohio's revenues. For the period from
August 21, 1998 through December 31, 1998, Insight L.P. earned approximately $.5
million in management fees from Insight Ohio and for the year ended December 31,
1999, such management fees were approximately $1.4 million.



                                      F-14
<PAGE>

E.   Insight Ohio (continued)

Although Insight L.P. manages and controls the day to day operations of Insight
Ohio, the shareholders of Coaxial have significant participating rights.
Accordingly, Insight L.P. is accounting for its investment in Insight Ohio under
the equity method of accounting. Insight L.P. is amortizing the difference
between its initial $10.0 million investment and its 75% interest in Insight
Ohio's deficiency in assets over a period of 12 1/2 years. Such period takes
into account the amortization periods related to the fair value of Insight
Ohio's tangible and intangible assets. Accordingly, the accompanying statement
of operations for the years ended December 31, 1998 and 1999 include Insight
L.P.'s share of Insight Ohio's operating income (loss) of approximately $.1
million and $(4.6) million, respectively and the amortization of the
aforementioned deficiency in assets of approximately $3.4 million and $8.6
million, respectively. The Company has provided a commitment letter to Insight
Ohio to fund any operating shortfall Insight Ohio may experience during the next
year and accordingly, the Company continued to apply the equity method of
accounting for its investment. The Company's investment balance at December 31,
1999 was approximately $(6.5) million.

F.   SourceSuite LLC

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, the
Interactive Channel products and services, including SourceGuide and LocalSource
television content. Source Media will manage the operations of the joint
venture. The Company contributed $13 million in equity financing. Source Media
and the Company each own 50% of the joint venture.

The Company is accounting for its investment in SourceSuite LLC under the equity
method of accounting. Accordingly, the accompanying statement of operations for
the year ended December 31, 1999 includes a loss of approximately $704,000 which
represents the Company's 50% share of SourceSuite LLC's net loss for the year.

In connection with the Contribution Agreement, the Company and Source Media
entered into a Common Stock and Warrants Purchase Agreement dated as of July 29,
1999, whereby the Company agreed to purchase 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 million in cash. The
Company purchased the shares of common stock on November 17, 1999. As of
December 31, 1999, the Company recorded an unrealized gain of approximately
$3.6 million, which is reflected as a separate


                                      F-15
<PAGE>

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



F.   SourceSuite LLC (continued)

component of stockholders' equity. The unrealized gain was calculated as the
difference between the cost of the stock and its fair value at December 31,
1999. Fair value was determined using the quoted market price of the stock.

Source Media also issued to the Company five-year warrants to acquire up to an
additional 4,596,786 shares of its common stock at an exercise price of $20.00
per share. The Company had not exercised any of the warrants as of December 31,
1999.

In addition, in October 1999, the Company 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,
1999, the Company recorded an unrealized gain of approximately $1.8 million,
which is reflected as a separate component of stockholders' equity. The
unrealized gain was calculated as the difference between the amortized cost of
the bonds and their fair value at December 31, 1999. Fair value was determined
using the quoted market price of the bonds.

G.   Fixed Assets

Fixed assets consist of:

<TABLE>
<CAPTION>
                                                               December 31,
                                                           1998          1999
                                                       ------------------------
                                                           (in thousands)

<S>                                                     <C>           <C>
Land, buildings and improvements                        $   4,903     $  13,956
Cable television equipment                                181,635       717,707
Furniture, fixtures and office equipment                    8,941        16,332
                                                       ------------------------
                                                          195,479       747,995
Less accumulated depreciation and amortization            (40,067)     (104,857)
                                                       ------------------------
                                                        $ 155,412     $ 643,138
                                                       ========================
</TABLE>


                                      F-16
<PAGE>

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



H.   Intangible Assets

Intangible assets consist of:

<TABLE>
<CAPTION>
                                                            December 31,
                                                      1998              1999
                                                 ------------------------------
                                                          (in thousands)
<S>                                              <C>                <C>
Franchise rights                                 $   493,302        $ 1,233,091
Goodwill                                               6,943              1,190
                                                 ------------------------------
                                                     500,245          1,234,281
Less accumulated amortization                        (37,890)           (94,164)
                                                 ------------------------------
                                                 $   462,355        $ 1,140,117
                                                 ==============================
</TABLE>


I.   Debt

Debt consists of:

<TABLE>
<CAPTION>
                                                               December 31,
                                                         1998            1999
                                                     ---------------------------
                                                              (in thousands)

<S>                                                  <C>              <C>
Revolving Credit Facility                            $  111,100       $    1,000
Insight Indiana Credit Facility                         460,000          470,000
Insight Kentucky Credit Facility                             --          562,000
Insight Midwest Senior Notes                                 --          200,000
Note payable to Media One                                 2,563               --
                                                     ---------------------------
                                                     $  573,663       $1,233,000
                                                     ===========================
</TABLE>

Revolving Credit Facility

On January 22, 1998, the Company entered into a third amended and restated
credit facility, which increased the maximum amount of borrowings under the
amended and restated credit facility from $220.0 million to $340.0 million. As a
result of the contribution of certain of the Company's cable television systems
to Insight Indiana and the execution by Insight Indiana of its own credit
facility, the Company entered into a fourth amended and restated credit
agreement which expires in December 2005 and reduced the maximum amount of
borrowings to $140.0 million. Borrowings under the fourth amended and restated
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


                                      F-17
<PAGE>

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

I.   Debt (continued)

the LIBOR option. At December 31, 1998 and 1999, approximately $111.0 million
and $1.0 million, respectively, was outstanding under this facility.

The fourth amended and restated credit facility is subject to numerous
restrictive covenants, including but not limited to, restrictions on incurrence
of indebtedness, mergers, acquisitions, asset sales, distributions, and capital
expenditures. In addition, there are a series of financial tests including those
measuring the Company's coverage ratios and leverage. For the years ended
December 31, 1997, 1998, and 1999 average interest rates were 8.4%, 8.2% and
8.0%, respectively. Such amended credit facility is secured by substantially all
the present and future assets of the Company other than those of Insight
Midwest.

In March 1993, the Company issued $108.0 million aggregate principal amount of
11 1/4% Notes due in full on March 1, 2000. Effective March 1, 1997, the Company
repurchased such notes for $111.2 million, which resulted in an extraordinary
loss of $5.2 million.

Insight Indiana Credit Facility

At December 31, 1999, Insight Indiana had a credit facility that provides for
term loans of $300.0 million and for revolving credit loans of up to $250.0
million (the "Insight Indiana Credit Facility"). The Insight Indiana Credit
Facility matures in December 2006, and contains quarterly reductions in the
amount of outstanding loans and commitments commencing in March 2001.
Obligations under this credit facility are secured by all of the membership
interests of Insight Indiana and any amounts payable to its members. 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 credit
facility requires Insight Indiana to meet certain debt financial covenants. At
December 31, 1999, $470.0 million was outstanding under the Insight Indiana
Credit Facility. For the two months ended December 31, 1998 and the year ended
December 31, 1999 interest rates approximated 7.60% and 7.43%, respectively.

Insight Kentucky Credit Facility

The Kentucky credit facility (the "Insight Kentucky Credit Facility") provides
for two term loans of $100.0 million and $250.0 million and for revolving credit
loans of up to $325.0 million. Loans under the Insight Kentucky Credit Facility
may be used to refinance debt, finance acquisitions, capital expenditures and
for working capital and general corporate purposes as permitted by the
agreement. The term loans mature in September and December 2007 and the
revolving credit loans mature in October 2006, with quarterly reductions in the
amount of outstanding revolving credit loans and commitments commencing in June
2001. Obligations under the Insight Kentucky Credit



                                      F-18
<PAGE>

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


I.   Debt (continued)

Facility are guaranteed by Insight Kentucky and Insight Kentucky Partners II,
L.P. (a subsidiary of Insight Kentucky Partners I, L.P.), and are secured by all
of the partnership interests of Insight Kentucky Partners I, L.P (a subsidiary
of Insight Kentucky) and its subsidiaries and any intercompany notes made in
favor of Insight Kentucky Partners I, L.P. and its subsidiaries. Revolving loans
under the Insight Kentucky Credit Facility bear interest, at Insight Midwest's
option at an alternate base 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 Insight
Midwest's option, at an alternate base or Eurodollar rate, plus an additional
margin. For the three months December 31, 1999, average interest rates
approximated 8.47%.

The Insight Kentucky Credit Facility contains a number of covenants that, among
other things, restrict the ability of Insight Kentucky to make capital
expenditures, acquire or dispose of assets, enter into mergers, incur additional
indebtedness, pay dividends or other distributions, create liens on assets, make
investments, and engage in transactions with related parties. The Insight
Kentucky Credit Facility permits the distribution to Insight Midwest of amounts
equal to the interest then due and owing on the notes, assuming that the
maturity of the notes has not been accelerated and, before and after giving
effect to such payment, no default exists under the facility.

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. As of December 31, 1999, there was approximately $562.0
million outstanding under the $675.0 million Insight Kentucky Credit Facility.

Insight Midwest Senior Notes

On October 1, 1999 contemporaneously with the closing of Insight Kentucky,
Insight Midwest completed a $200 million high yield offering of 9 3/4 % senior
notes due 2009 (the "Insight Midwest Senior Notes"). The proceeds of the
offering were used to repay certain debt of the IPVI Partnership. Interest on
the Insight Midwest Senior Notes accrues at the rate of 9 3/4% per annum and is
payable semi-annually on April 1 and October 1, commencing on April 1, 2000.

The Insight Midwest Senior Notes are redeemable on or after October 1, 2004. In
addition, up to 35% of the Insight Midwest Senior Notes may be redeemed prior to
October 1, 2002 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 a change of control.
The Insight Midwest Senior Notes are general unsecured obligations, and are
subordinate to all liabilities of Insight Midwest's subsidiaries, the amount of
which was approximately $1.1 billion as of



                                      F-19
<PAGE>

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

I.   Debt (continued)

December 31, 1999.

The Insight Midwest Senior Notes contain certain covenants that limit, among
other things, the ability of Insight Midwest and its subsidiaries to incur
additional debt; pay dividends on Insight Midwest's capital stock or repurchase
Insight Midwest's capital stock; make investments; use assets as security in
other transactions; and sell certain assets or merge with or into other
companies.

Note payable

On November 24, 1997, the Company purchased the 34% limited partnership interest
held by Media One for $10.3 million. The Company paid $2.6 million in cash and
issued a two-year senior subordinated note payable for $7.7 million. The note
bore interest at a rate of 9% payable annually. The December 31, 1998 balance of
$2.6 million was paid in November 1999.

At December 31, 1999 required annual principal payments under the aforementioned
credit facilities are as follows (in thousands):

<TABLE>
<S>                                                           <C>
                  2000                                        $     1,000
                  2001                                             98,000
                  2002                                            107,750
                  2003                                            129,250
                  2004                                            152,500
                  Thereafter                                      744,500
                                                              ------------
                                                               $1,233,000
                                                              ============
</TABLE>


As required by its credit facilities, the Company enters into interest-rate swap
agreements to modify the interest characteristics of its 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 to or receivable from counterparties is included in other
liabilities or assets. At December 31, 1999 the Company 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 $766.0 million notional
value of debt. These agreements expire between December 2001 and July 2003. The
fair values of the swap agreements are not recognized in the financial
statements and approximated $7.2 million at December 31, 1999.


                                      F-20
<PAGE>

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

J.   Capital Stock

The authorized capitalization of the Company 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 commons tock are entitled to ten votes per share. Prior to
the Company's IPO, the Company operated as a limited partnership and had
outstanding limited partnership units. In addition, as of December 31, 1998, the
Company had outstanding redeemable Class B units (Note K). In connection with
the IPO, the limited partnership units and redeemable Class B units were
exchanged for shares of the Company's 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>

K.   Redeemable Class B Common Units, Warrants and Redeemable Preferred Limited
     Units

On January 29, 1998, Insight L.P. issued 47,215,859 non-interest bearing Class B
Common Units ("Class B Units") to Vestar Capital Partners III ("Vestar") in
exchange for $50 million in cash, resulting in Vestar holding a 45% ownership
interest on a fully diluted basis in the partnership. In connection with the
issuance of the Class B Units, Insight L.P. paid placement fees and expenses of
$1.7 million to Vestar and $2.7 million to an investment banking institution
which amounts have been netted against the aforementioned proceeds. The Class B
Unit agreement includes a put/call arrangement whereby the Class A partners or
the Class B partners may call or put, respectively, the Class B units during a
60 day period commencing in July 2004 at their fair market value. Distributions
between the Class A Units and Class B Units follow ownership percentage
interests until the Class B Units earn a 25% annual internal rate of return at
which time distributions are amended to approximately 30% to the Class B Unit
holders and 70% to the Class A Unit holders. In addition, management can earn up
to 6% of the Class B holdings upon achieving certain performance measures.
During 1999, in connection with the Company's IPO, the Class B Units were
exchanged for shares of Class A common stock (Note J).


                                      F-21
<PAGE>

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

K. Redeemable Class B Common Units, Warrants and Redeemable Preferred Limited
   Units (continued)

In connection with a prior debt issuance, Insight L.P. issued detachable
warrants, which were valued at $5.6 million at the date of issuance. Each
warrant entitled the holder thereof to purchase 4.22 Common Units in the
partnership at an exercise price of $1.61 per warrant. For accounting purposes,
the value of the warrants was determined by management assuming that a sale had
occurred as of each year-end and without regard to the illiquid nature of the
warrants. During 1998, Insight L.P. acquired 512,200 warrants for approximately
$.8 million. During 1998, 599,310 warrants were converted into 2,529,088
partnership units and 383,303 units expired. During 1999, in connection with the
Company's IPO, the partnership units were exchanged for shares of common stock.

In 1993, Insight L.P. issued redeemable preferred limited units to a group of
investors for a gross purchase price of $27 million. During January 1998, all of
the remaining units were redeemed for $60 million pursuant to a negotiated
agreement. Prior to such redemption, the units had a liquidation preference
equal to the capital contribution plus a cumulative return on such capital at an
annual rate of 12 1/2%. In addition, the units shared in the increase in the
equity value of the partnership.

L.   @Home Warrants

Under a distribution agreement with At Home Corporation, a high-speed internet
access service provider, ("@Home"), the Company provides high-speed Internet
access to subscribers over its network in certain of its cable television
systems. In connection with the acquisition of the Kentucky systems, Insight
Kentucky obtained agreements whereby @Home issued warrants 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. Under the provisions of the agreements, Insight
Kentucky estimates that it may purchase up to 459,200 shares of @Home Stock. The
warrants become vested and exercisable, subject to certain forfeiture and other
conditions, based on operational targets which include offering the @Home
service by Insight Kentucky in its service areas and obtaining specified numbers
of @Home subscribers over the remaining six-year term of the @Home distribution
agreement. The Company has not recognized any income related to the warrants for
the year ended December 31, 1999.

M.   Comprehensive Income

SFAS 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. At December 31, 1999, components of other comprehensive
income consisted of the net unrealized gain on marketable securities of
approximately $3.2 million, net of income tax of approximately $2.2 million.
Prior to 1999, there were no items of other comprehensive income.


                                      F-22
<PAGE>

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

N.   Earnings Per Share

Earnings per share is calculated in accordance with the FASB Statement No. 128
"Earnings Per Share." The following table sets forth the computation of basic
and diluted earnings (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
warrants.

<TABLE>
<CAPTION>
                                                                       Year ended December 31,
                                                                   1997         1998         1999
                                                                -----------------------------------
<S>                                                             <C>          <C>          <C>
Numerator:
    Net income (loss) from before extraordinary item            $  79,125    $ 141,873    $ (84,208)
    Accretion of redeemable Class B units                              --       (5,729)      (7,118)
    Accretion of redeemable preferred limited units               (15,275)          --           --
                                                                -----------------------------------
Numerator for basic earnings (loss) per share                      63,850      136,144      (91,326)
Effect of dilutive securities                                          --        5,729           --
                                                                -----------------------------------
Numerator for diluted earnings (loss) per share                    63,850      141,873      (91,326)

Denominator for basic income (loss) per share:                          --
   Weighted average Class A units and general partner's interest   31,635       20,287       35,417
Effect of dilutive securities
     Redeemable Class B units                                          --       10,285           --
     Warrants                                                       2,519          621           --
                                                                -----------------------------------
Potential dilutive securities                                       2,519       10,906           --
                                                                -----------------------------------
Denominator for dilutive income (loss) per share                   34,154       31,193       35,417
                                                                ===================================
Basic income (loss) per share before extraordinary item         $    2.02    $    6.71    $   (2.58)
Diluted income (loss) per share before extraordinary item       $    1.87    $    4.55    $   (2.58)
Basic income (loss) per share                                   $    1.86    $    6.55    $   (2.58)
Diluted income (loss) per share                                 $    1.78    $    4.61    $   (2.58)
</TABLE>


                                      F-23
<PAGE>

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

O.   Income Taxes

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

Effective July 26, 1999, the Company converted to a corporation and is now
subject to federal, state and local income taxes. In connection with the IPO,
the Company recorded a one time non-recurring charge of approximately $39.5
million for deferred taxes upon the exchange of the limited partnership
interests in Insight L.P. for the Company's stock. Such charge relates to the
deferred tax liability associated with the difference between the financial
statements and tax basis of the assets and liabilities of the Company. For the
period ended December 31, 1999, the Company recorded a net deferred tax benefit
of approximately $8.2 million relating to losses from operations subsequent to
the conversion. In addition, the Company recorded a current tax provision for
approximately $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 the
Company's deferred tax assets and liabilities consist of the following at
December 31, 1999 (in thousands):

<TABLE>
<S>                                                            <C>
       Deferred tax assets:
           Net operating loss carryforward                     $  2,871
           Accounts receivable                                      145
           Investment in unconsolidated affiliates               12,899
           Accrued expenses and other liabilities                   127
                                                               --------
       Gross deferred tax asset                                $ 16,042

       Deferred tax liabilities:
           Unrealized gain on marketable securities               2,201
           Depreciation & amortization                           47,370
                                                               --------
       Gross deferred tax liability                              49,571

       Net deferred tax liability                              $(33,529)
                                                               ========
</TABLE>



                                      F-24
<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, 1997, 1998 and 1999
are as follows:

<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                         1997              1998              1999
                                                                       --------------------------------------------
<S>                                                                    <C>               <C>               <C>
Expense (benefit) at a federal statutory rate (34%)                    $ 25,100          $ 47,100          $(17,756)
State and local taxes, net                                                   --                --            (1,141)
Expenses not deductable for U.S. tax purposes                                 7                11               196
Adjustment to record charge upon conversion from a
  partnership to a corporation                                               --                --            39,526
Losses (income) for which no expense/benefit has been provided
                                                                        (25,107)          (47,111)           10,761
                                                                       --------------------------------------------
                                                                       $     --          $     --          $ 31,586
                                                                       ============================================
</TABLE>

At December 31, 1999, the Company had a net operating loss carryforward of
approximately $7.0 million for U.S. federal income tax purposes. The Company's
net operating loss began accumulating effective July 26, 1999, the date of the
IPO. The net operating loss will expire in the year 2019.

P.   Stock Option Plan and Other Stock Based Compensation

Stock Option Plan

The Company 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"). The Company has reserved
5,000,000 shares of common stock for grant under the Plan. ISOs may be granted
only to officers and key employees of the Company and nonqualified stock options
and SARs may be granted to the Company's officers, employees, directors, agents
and consultants. The Plan provides for the granting of ISOs at an exercise price
that is not less than the fair market value of the stock on the date of grant
and the granting of nonqualified options and SARs with any exercise price.


                                      F-25
<PAGE>

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


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

Stock options vest over five years and expire ten years from the date granted.
The following summarizes stock option activity for 1999:

<TABLE>
<CAPTION>
                                                                             Options                 Weighted Average
                                                                           Outstanding                Exercise Price
                                                                           ----------                ----------------
<S>                                                                         <C>                          <C>
        Outstanding as of January 1, 1999                                          --                        --
        Options granted                                                     2,892,500                    $24.56
        Options exercised                                                          --                        --
        Options canceled/forfeited                                            (15,000)                   $24.50
                                                                           ------------------------------------
        Outstanding as of December 31, 1999                                 2,877,500                    $24.56
                                                                           ====================================
</TABLE>

The weighted average fair value of options granted in 1999 was $13.39 per share.
The range of exercise prices for options outstanding at December 31, 1999 was
$22.38 to $30.13 with a weighted average contractual life of 9.7 years. None of
the options were exercisable as of December 31, 1999.

Pursuant to Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123), the Company has 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 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, the Company's net loss and net loss per
share for the year ended December 31, 1999 would have been approximately $86.2
million and $2.63, respectively. 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 determining the fair value: weighted
average risk-free interest rate - 6.5%; expected dividend yield - 0%; expected
option life - 7 years; and expected stock price volatility - 42%.

Other Stock Based Compensation

In connection with the IPO, the Company issued a total of 1,412,181 shares of
common stock to its employees. The Company recorded non-cash compensation
expense of approximately $19.3 million in connection with the issuance of these
shares. In October 1999, the Company granted loans to these employees, the
proceeds of which were used to satisfy the individual income tax withholding
obligation with respect to the receipt of these shares. In the aggregate, these
loans total approximately $13.9 million. The loans are non-recourse and are
represented by notes which are secured by Company common stock pledges equal to
the number of shares each individual received as compensation, bear interest at
the rate of 6% per annum and are payable upon the fifth anniversary of the


                                      F-26
<PAGE>

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

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

note, 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.

Q.   Financial Instruments

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
accounts receivable. The Company maintains cash and cash equivalents with
various financial institutions. These financial institutions are located
throughout the country and the Company's 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 the
Company's customer base.

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

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

Debt: The carrying amounts of the Company's borrowings under its credit
arrangements approximate fair value as they bear interest at floating rates. The
carrying amounts of the Insight Midwest's senior notes approximate fair value as
it bears interest at a fixed rate.

Interest rate swap agreements: The fair value of swap agreements are not
recognized in the financial statements and approximated $7.2 million at December
31, 1999, based on market trading value.

R.   Related Party Transactions

Through November 1999, the Company had an agreement with Media One which enabled
the Company to obtain certain services (principally pay and basic cable
programming services) and equipment at rates lower than those which would be
available from independent parties. In each of the years ended December 31,
1997, 1998, and 1999, programming and other operating costs include
approximately $200,000 of expenses for programming services paid directly to
Media One.

In addition, in connection with the Contribution Agreement (Note D), the
Company purchases substantially all of its pay television and other programming
for the Indiana and Kentucky systems from affiliates of TCI. Charges for such
programming were $1.4 million for the two months ended December 31, 1998 and
$29.6 million for the year ended December 31, 1999. Management believes that the



                                      F-27
<PAGE>

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


R.   Related Party Transactions (continued)

programming rates charged by TCI affiliates are lower than those which would be
available for independent parties.

S.   401(k) Plan

The Company sponsors a savings and investment 401(k) Plan (the "Plan") for the
benefit of its employees. All employees who have completed six months of
employment and have attained age 21 are eligible to participate in the Plan. The
Company makes matching contributions equal to 25% of the employee's contribution
that is not in excess of 5% of the employee's wages. During 1997, 1998 and 1999
the Company matched contributions of approximately $51,000, $188,000 and
$562,000, respectively.

T.   Commitments and Contingencies

The Company leases and subleases equipment and office space under operating
lease arrangements expiring through December 31, 2015. Future minimum rental
payments required under operating leases are as follows (in thousands):

<TABLE>
<S>                                               <C>
            2000                                  $ 3,227
            2001                                    2,269
            2002                                    1,956
            2003                                    1,841
            2004                                    1,726
            Thereafter                              9,463
</TABLE>

Rental expense for the years ended December 31, 1997, 1998 and 1999 approximated
$.7 million, $1.0 million and $2.1 million, respectively.

Certain of the Company's individual systems have been named in purported class
actions in various jurisdictions concerning late fee charges and practices.
Certain of the Company's cable television systems charge late fees to
subscribers who do not pay their cable bills on time. Plaintiffs generally
allege that the late fees charged by such cable


                                      F-28
<PAGE>

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

T.   Commitments and Contingencies (continued)

television systems are not reasonably related to the costs incurred by the cable
television systems as a result of the late payment. Plaintiffs seek to require
cable television systems to provide compensation for alleged excessive late fee
charges for past periods. These cases are at various stages of the litigation
process. Based upon the facts available, management believes that, although no
assurances can be given as to the outcome of these actions, the ultimate
disposition of these matters should not have a material adverse effect upon the
financial condition or results of operations of the Company.

The Company is subject to other 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 management's opinion that the
resolution of these matters will not have a material adverse affect on the
consolidated financial condition of the Company.

U.   Subsequent Events

Managed Indiana Systems

On March 27, 2000, the Company 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, by which
systems as of December 31, 1999 served approximately 114,000 customers in the
State of Indiana. The Company will earn an annual fee of 3% of gross revenues
for providing such consulting services. For the year ended December 31, 1999,
these Indiana systems had revenues of approximately $55.0 million. Nearly all of
these systems are contiguous to the Company's other Indiana systems.

Transactions with Source Media and Liberate Technologies

On March 3, 2000, pursuant to a merger with a subsidiary of Liberate
Technologies ("Liberate"), SourceSuite LLC (Note F) 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. Liberate's common stock had a
closing sale price per share of $82.00 as of March 24, 2000. Insight Interactive
and Source Media have agreed not to sell 80% of their Liberate shares prior to
July 31, 2000. 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,
the Company expects to record a gain ranging from approximately $60.0 million to
approximately $72.0 million, which will be recorded during the first quarter of
2000.

Agreement in Principle with AT&T

On March 15, 2000, the Company reached an agreement in principle with AT&T Corp.
for the delivery of telephone service utilizing the Company's cable television
systems


                                      F-29
<PAGE>

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


U.   Subsequent Events (continued)

under the "AT&T" brand name. The terms of the agreement in principle provide
that the Company will market, service and bill for local telephone service. AT&T
would be required to install and maintain the necessary switching equipment, and
would be the local exchange carrier of record. AT&T would pay the Company a fee
for the use of the local telephone lines, and will also compensate the Company
for installation and maintenance services at customers' residences. In addition,
AT&T would pay the Company commissions for sales the Company makes to its
customers. The Company expects to sell the AT&T-branded local telephone service
separately and as part of bundled offerings, which would also include the sale
of AT&T long-distance telephone services. The agreement in principle is subject
to the negotiation and execution of definitive agreements.

Greenwood Letter of Intent

On March 21, 2000, Insight Midwest entered into a letter of intent with Cable
One, Inc., a subsidiary of The Washington Post Company, for the acquisition of a
cable television system serving approximately 16,000 customers in Greenwood,
Indiana as of December 31, 1999. Due to its geographic proximity, the Company
intends to integrate the Greenwood system with its Central District in Indiana.
The acquisition by Insight Midwest of the Greenwood system would occur upon
completion of a proposed trade of systems between Cable One and AT&T Broadband.
The transaction is subject to the negotiation and execution of definitive
agreements.

Expansion of Insight Midwest

On March 23, 2000, the Company entered into a letter of intent with AT&T
Broadband to contribute to Insight Midwest additional cable television systems
serving approximately 537,000 customers, nearly doubling the customer base of
Insight Midwest. Through a series of transactions, the Company will contribute
to Insight Midwest its interests in systems serving approximately 187,000
customers and AT&T Broadbond will contribute systems serving approximately
350,000 customers. Initially, the Company would exchange its Claremont,
California system for a system in Freeport, Illinois, subject to completion by
AT&T Broadband of its proposed acquisition of MediaOne. The Freeport system
would be integrated into the Company's Rockford, Illinois system, creating a
cluster of approximately 75,000 customers in the northern part of the state. The
Company would also purchase from AT&T Broadband systems serving approximately
100,000 customers in North Central Illinois. Concurrently with this purchase,
the Company would contribute to Insight Midwest all of its systems not already
owned by Insight Midwest, including the newly purchased Illinois systems, the
expanded Rockford, Illinois cluster, the Company's interest in its Columbus,
Ohio system and its Griffin, Georgia system, as well as systems in Indiana not
already owned by Insight Midwest. At the same time, AT&T Broadband would
contribute to Insight Midwest systems located in Central and North Central
Illinois serving approximately 250,000 customers. As a result, Insight Midwest
would increase its customer base of approximately 748,800 as of December 31,
1999 to approximately 1.3 million, and the Company would increase its total
number of customers served by approximately 350,000. AT&T Broadband would
receive an amount of cash from the Company. Upon completion of the transactions,
Insight Midwest would remain equally owned by the Company and AT&T Broadband,
and the Company would continue to serve as the general partner and manage and
operate the Insight Midwest


                                      F-30
<PAGE>

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


U.   Subsequent Events (continued)

systems. The transactions are subject to the negotiation and execution of
definitive agreements.

V.  Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                                            Three months ended
                                                      --------------------------------------------------------------   Year ended
1999                                                   March 31         June 30        September 30      December 31   December 31
                                                      -----------------------------------------------------------------------------
<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 before
   extraordinary item                                    $0.24           $(1.07)          $(1.43)          $(0.15)          $(2.58)
Diluted income (loss) per share
   before extraordinary item                             $0.26           $(1.07)          $(1.43)          $(0.15)          $(2.58)
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>

<TABLE>
<CAPTION>
                                                                            Three months ended
                                                      --------------------------------------------------------------   Year ended
1998                                                   March 31         June 30        September 30      December 31   December 31
                                                      -----------------------------------------------------------------------------
<S>                                                   <C>              <C>              <C>              <C>              <C>
Revenue                                               $  23,161        $  25,162        $  25,480        $  39,099        $ 112,902

Operating income (loss)                                   5,863           10,370            6,348           (8,375)          14,206

Income (loss) before extraordinary item                      73            4,071             (299)         138,028          141,873

Net income (loss)                                            73            4,071             (299)         134,761          138,606

Basic income (loss) per share before
  extraordinary item                                         $-            $0.11           $(0.11)           $8.05            $6.71
Diluted income (loss) per share before
  extraordinary item                                         $-            $0.07           $(0.11)           $4.94           $4.55
Basic income (loss) per share                                $-            $0.11           $(0.11)           $7.85           $6.55
Diluted income (loss) per share                              $-            $0.07           $(0.11)           $4.82           $4.61


</TABLE>




                                      F-31
<PAGE>

                                   SIGNATURES

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

                                        Insight Communications Company, Inc.


Date: March 28, 2000                    By:  /s/ Michael S. Willner
                                             ----------------------
                                             Michael S. Willner, President and
                                             Chief Executive Officer


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


<TABLE>
<CAPTION>
Signatures                    Title                                              Date
----------                    -----                                              ----


<S>                           <C>                                                <C>
/s/ Sidney R. Knafel
-----------------------
Sidney R. Knafel              Chairman of the Board                              March 28, 2000


/s/ Michael S. Willner
-----------------------
Michael S. Willner            President, Chief Executive Officer and             March 28, 2000
                              and Director (Principal Executive Officer)


/s/ Kim D. Kelly
-----------------------
Kim D. Kelly                  Executive Vice President, Chief Financial          March 28, 2000
                              and Operating Officer, Treasurer and Director
                              (Principal Financial and Accounting Officer)


/s/ Thomas L. Kempner
-----------------------
Thomas L. Kempner             Director                                           March 28, 2000


/s/ James S. Marcus
-----------------------
James S. Marcus               Director                                           March 28, 2000


/s/ Prakash A. Melwani
-----------------------
Prakash A. Melwani            Director                                           March 28, 2000


/s/ Daniel S. O'Connell
-----------------------
Daniel S. O'Connell           Director                                           March 28, 2000
</TABLE>