<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
    (Mark One)

        [x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934

    For the fiscal year ended December 31, 1999

                                       OR

        [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934

    For the transition period from           to
                                   ---------    ---------

               Commission file numbers 333-35183 and 333-35183-01

                           JAMES CABLE PARTNERS, L.P.
                            JAMES CABLE FINANCE CORP.
           (Exact name of Registrants as specified in their charters)

<TABLE>

<S>                                                                     <C>
                             Delaware                                               38-2778219
                             Michigan                                               38-3182724
  (State or Other Jurisdiction of Incorporation or Organization)       (I.R.S. Employer Identification No.)

               710 North Woodward Avenue, Suite 180                                    48304
                    Bloomfield Hills, Michigan                                      (Zip Code)
             (Address of Principal Executive Offices)
</TABLE>

Registrants' telephone number, including area code:  (248) 647-1080

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

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

Indicate by check mark whether each of the registrants (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 registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]

The aggregate market value of the voting and non-voting common equity of James
Cable Partners, L.P. held by non-affiliates of James Cable Partners, L.P. is
estimated to be $0.

The aggregate market value of the voting and non-voting common equity of James
Cable Finance Corp. held by non-affiliates of James Cable Finance Corp. is
estimated to be $0.

The number of shares of James Cable Finance Corp. outstanding as of March 15,
2000 was 1,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.

*  James Cable Finance Corp. meets the conditions set forth in General
   Instruction I (1)(a) and (b) to Form 10-K and is therefore filing with the
   reduced disclosure format.


<PAGE>   2

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                               Page No.
                                           PART I
<S>     <C>                                                                                       <C>
Item 1. Business.............................................................................     3
                    General..................................................................     3
                    Business Strategy........................................................     3
                    Industry Overview........................................................     5
                    The Systems..............................................................     6
                    Programming and Subscriber Rates.........................................     9
                    Internet Services........................................................     10
                    Customer Service and Marketing...........................................     11
                    Technical Overview.......................................................     11
                    Franchises...............................................................     12
                    Competition..............................................................     13
                    Legislation and Regulation...............................................     14
                    Insurance................................................................     18
                    Employees................................................................     18
Item 2. Properties...........................................................................     18
Item 3. Legal Proceedings....................................................................     18
Item 4. Submission of Matters to a Vote of Security Holders..................................     18

                                           PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters................     19
Item 6. Selected Financial Data..............................................................     19
Item 7. Management's Discussion and Analysis of Financial Condition and
             Results of Operations...........................................................     22
                   Overview..................................................................     22
                   Results of Operations.....................................................     23
                   Liquidity and Capital Resources...........................................     24
                   Impact of Inflation and Changing Prices...................................     26
                   Year 2000 Compliance......................................................     26
                   Effects of New Accounting Pronouncements..................................     26
                   Sales of Cable Systems....................................................     26
                   Forward-Looking Statements................................................     27
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.......................     29
Item 8. Financial Statements and Supplementary Data..........................................     29
Item 9. Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure.............................................     29

                                          PART III
Item 10.    Directors and Executive Officers.................................................     30
Item 11.    Executive Compensation...........................................................     30
Item 12.    Security Ownership of Certain Beneficial Owners and Management...................     31
Item 13.    Certain Relationships and Related Transactions...................................     31

                                           PART IV
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K.................     32
</TABLE>


                                      -2-


<PAGE>   3


PART I

ITEM 1.  BUSINESS

GENERAL:

James Cable Partners, L.P. ("James," and together with its wholly owned
subsidiary James Cable Finance Corp., the "Company") owns, operates and develops
cable television systems (the "Systems") serving rural communities in seven
geographically and economically diverse clusters. The Company's Systems are
operated under the name "CommuniComm Services" and are located in Oklahoma,
Texas, Georgia, Louisiana, Colorado, Wyoming, Tennessee, Alabama and Florida. As
of December 31, 1999, the Systems passed an estimated 129,600 homes and served
71,864 basic subscribers, representing a basic penetration of 55.5%. The
Company's goal is to maintain its position as the preferred provider of video
services, and to become the single hard wire broadband provider of enhanced
video services and advanced telecommunication services, in the markets that it
serves. James' principal executive offices are located at 710 N. Woodward
Avenue, Suite 180, Bloomfield Hills, Michigan 48304, and its telephone number is
(248) 647-1080.

James is a Delaware limited partnership that was formed in January, 1988 for the
purpose of realizing capital appreciation through the ownership, control and
operation of assets comprising cable television systems. Unless its term is
extended as provided in its limited partnership agreement, James will be
dissolved upon the earliest to occur of (i) December 31, 2005, (ii) a
determination, by the General Partner, of James that James should be dissolved,
with the approval of 51% of the Class A Limited Partner interests, (iii) the
sale or disposition by James of substantially all of its assets, (iv) the
consent of holders of 51% of the Class A Limited Partner interests of James, (v)
the removal of the General Partner pursuant to the terms of the Partnership
Agreement, or (vi) the bankruptcy, insolvency, dissolution or withdrawal of the
General Partner. The Term can be extended upon the affirmative vote of 51% of
the Class A Limited Partner interests and the consent of the General Partner. In
certain of the foregoing cases, the Class A Limited Partners may elect under the
Partnership Agreement to reconstitute the business of James in a new limited
partnership with a new General Partner elected by the Class A Limited Partners.

Since its inception in 1988, James' business and affairs have been managed and
controlled by its general partner, James Communications Partners, a Michigan
co-partnership (the "General Partner"). The General Partner is managed and
controlled by its three general partners, Jamesco, Inc., Trenary Corp., Ltd, and
DKS Holdings, Inc. See "Part III-Item 10. Directors and Executive Officers." The
General Partner's principal executive office is located at 710 N. Woodward
Avenue, Suite 180, Bloomfield Hills, Michigan 48304 and its telephone number is
(248) 647-1080.

James Cable Finance Corp. ("Finance Corp.") is a wholly-owned subsidiary of
James that was incorporated under the laws of the State of Michigan on June 19,
1997 for the purpose of serving as a co-issuer with James of the $100 million
principal amount notes due 2004 that the Company issued during the third and
fourth quarters of 1997. Finance Corp.'s only asset consists of $1,000 cash and
there are substantial contractual restrictions on its activities. Finance
Corp.'s principal executive office is located at 710 North Woodward Avenue,
Suite 180, Bloomfield Hills, Michigan 48304, and its telephone number is (248)
647-1080.

BUSINESS STRATEGY:

The Company believes that there are competitive and economic advantages to
owning and operating cable television systems in rural markets. Due to lower
population densities and higher per household plant installation costs, rural
markets are more likely than larger urban and suburban markets to have a single
hard wire broadband video and telecommunications service provider. In addition,
cable television systems in rural markets are typically characterized by lower
churn rates and greater penetration than larger urban and suburban markets. In
rural markets, cable service often is required for adequate reception of a full
range of over-the-air television stations. Moreover, fewer entertainment
alternatives are available, and cable television provides a major source of
entertainment.

The Company's business strategy is to (i) selectively upgrade the Company's
Systems, (ii) provide enhanced digital video, (iii) deliver advanced
telecommunications services, including Internet access, and (iv) pursue
strategic acquisitions. It has also attempted to maintain and improve system
operating results by implementing management, operational and technical changes
that are intended to improve operating efficiencies, enhance operating cash flow
and reduce overhead through economies of scale. To this end, the Company has
"clustered" its Systems in concentrated geographic areas, which allows fixed
costs to be spread over an extended subscriber base. In an effort to further
enhance its operational and financial performance, the Company may from time to
time consider opportunities to acquire or exchange its assets for cable
television systems located near its existing markets.

-     Selectively Upgrade Systems. The Company is upgrading certain of its cable
      television systems to further strengthen the Company's position as the
      preferred provider of video services in the communities it serves. These
      upgrades, which employ fiber optic technology, increase the bandwidth of
      the Company's cable plant generally to 750 megahertz ("MHz"), thereby
      increasing channel capacity, enhancing signal quality and improving
      technical reliability. The Company believes the upgrades will enable it to
      offer comparable or superior video service and quality at attractive
      pricing levels relative to its competitors, such


                                      -3-
<PAGE>   4

      as direct broadcast satellite ("DBS"). The Company also believes that the
      upgrades will provide the technical platform necessary for the development
      and delivery of advanced telecommunications services.

      As of December 31, 1999, the Company had completed the upgrades of its
      cable plant to 750 MHz in Durant and Calera, Oklahoma, serving
      approximately 4,400 subscribers; Hawkinsville and Cochran, Georgia,
      serving approximately 2,600 subscribers; Douglas, Torrington, Wheatland
      and Lingle, Wyoming, serving approximately 5,500 subscribers; Roanoke and
      Wadley, Alabama, serving approximately 2,300 subscribers; and Eatonton,
      Madison and Gray, Georgia, serving approximately 3,900 subscribers. Also,
      the Company has completed its projects in Westlake, Louisiana, serving
      approximately 6,600 subscribers, and Decatur, Texas, serving approximately
      1,100 subscribers, in which it supplemented its 450 MHz cable plant with
      fiber to allow for the introduction of advanced telecommunications
      services, as well as providing enhanced signal quality and improved
      technical reliability.

      In addition, the Company is currently in the construction phase of its 750
      MHz upgrade to the cable plant for its entire Tennessee System which
      serves approximately 6,100 subscribers. Upon completion of the Tennessee
      upgrade, which is expected to occur during 2001, and with the completed
      upgrades discussed above, the Company will have the ability to provide
      advanced telecommunications services to approximately 50% of its total
      subscriber base.

      The Company is continually in the process of identifying other areas
      within its Systems which can be upgraded to allow for the introduction of
      advanced telecommunications services. However, the Company will only
      proceed with upgrades which it believes are economically feasible after
      carefully weighing the anticipated revenues against the costs of
      completing the upgrade.

-     Provide Enhanced Digital Video. The Company, in order to provide enhanced
      digital video in the upgraded Systems and certain other Systems, launched
      Headend In The Sky(R) ("HITS"), a digital compression service developed by
      National Digital Television Center, Inc., a subsidiary of AT&T, in its
      Durant, Oklahoma System in the second quarter of 1999. HITS allows the
      Company to deliver video services such as pay-per-view programming and a
      tier or multiple tiers of niche satellite programming. The Company
      believes that these enhanced digital video services will allow it to
      provide services comparable to DBS. After its initial testing in the
      Durant, Oklahoma System, the Company began introducing HITS services in
      certain of its other Systems during the first quarter of 2000 and plans to
      introduce HITS in additional Systems during the year 2000. Currently, the
      HITS service is available to approximately 30,000 of the Company's basic
      subscribers.

-     Deliver Advanced Telecommunications Services, Including Internet Access.
      The Company believes that upgraded advanced telecommunications services
      will provide additional revenue opportunities. The Company further
      believes that the cable infrastructure will provide the fastest, most
      cost-effective delivery mechanism for Internet access, inter- and intra-
      network data services and telephony in many of its markets.

      After its initial launch of high-speed Internet services in the fourth
      quarter of 1997, the Company has begun offering either two-way or one-way
      high-speed Internet services in portions of every Cluster (See "- The
      Systems") except for Tennessee. While these high-speed Internet services
      are fairly new in many of the areas, the Company currently has more than
      1,400 high-speed Internet customers. The Company intends to increase the
      number of high-speed Internet customers through an increased emphasis on
      marketing of the services offered and customer based education about the
      benefits of the use of high-speed Internet services.

      In addition to its high-speed Internet services, the Company is also
      offering traditional dial-up Internet services in many of its Systems. The
      Company's dial-up services are similar to those offered by companies such
      as America Online and The Microsoft Network. The Company currently has
      more than 3,100 dial-up Internet customers.

-     Pursue Strategic Acquisitions. The Company intends to consider
      opportunities to acquire cable television systems. Because it is more cost
      effective to provide advanced telecommunications services over an expanded
      subscriber base within a concentrated geographic area, the Company will
      generally seek to acquire cable television systems, or groups of systems,
      in close proximity to its existing Systems and markets. The Company may
      also consider acquisitions in other geographic areas where consistent with
      its business strategy. Furthermore, the Company may divest itself, through
      asset exchanges or outright sales, of cable television systems that do not
      readily lend themselves to the Company's business strategy. Factors likely
      to be considered by the Company in evaluating the desirability of a
      potential acquisition or asset exchange opportunity include price and
      terms, subscriber densities, growth potential (in terms of both market and
      cash flow) and whether the target system can be readily integrated into
      the Company's operations.




                                      -4-
<PAGE>   5




INDUSTRY OVERVIEW:

A cable television system receives television, radio and data signals at its
"headend" site by means of off-air antennas, microwave relay systems and
satellite earth stations. These signals are then modulated, amplified and
distributed, primarily through coaxial and fiber optic distribution systems, to
deliver a wide variety of channels of television programming, primarily
entertainment and informational video programming, to the homes of subscribers
who pay fees for this service, generally on a monthly basis. A cable television
system may also originate its own television programming and other information
services for distribution through the system. Cable television systems generally
are constructed and operated pursuant to non-exclusive franchises or similar
licenses granted by local governmental authorities for a specified period of
time.

The cable television industry developed in the United States in the late 1940s
and early 1950s in response to the needs of residents in predominantly rural and
mountainous areas of the country where the quality of off-air television
reception was inadequate due to factors such as topography and remoteness from
television broadcast towers. In the 1960s, cable systems also developed in small
and medium-sized cities and suburban areas that had a limited availability of
clear off-air television station signals. All of these markets are regarded
within the cable industry as "classic" cable television system markets. In more
recent years, cable television systems have been constructed in large urban
cities and nearby suburban areas, where good off-air reception from multiple
television stations usually is already available, in order to offer customers
the numerous satellite-delivered channels typically carried by cable systems
that are not otherwise available through broadcast television reception.

Cable television systems offer customers various levels (or "tiers") of cable
services consisting of broadcast television signals of local network affiliates,
independent and educational television stations, a limited number of television
signals from so-called "super stations" originating from distant cities (such as
WGN), various satellite-delivered, non-broadcast channels (such as Cable News
Network ("CNN"), MTV: Music Television ("MTV"), the USA Network ("USA"), ESPN
and Turner Network Television ("TNT")), programming originated locally by the
cable television system (such as public, governmental and educational access
programs) and informational displays featuring news, weather and public service
announcements. For an extra monthly charge, cable television systems also offer
"premium" television services to customers on a per-channel basis. These
services (such as Home Box Office ("HBO"), Showtime and selected regional sports
networks) are satellite channels that consist principally of feature films, live
sporting events, concerts and other special entertainment features, usually
presented without commercial interruption.

A subscriber generally pays an initial installation charge and fixed monthly
fees for basic and premium television services and for other services (such as
the rental of converters and remote control devices). Such monthly service fees
constitute the primary source of revenues for cable television systems. In
addition to subscriber revenues, cable television systems also frequently offer
to their subscribers home shopping services, which pay such systems a share of
revenues from products sold in the systems' service areas. Some cable television
systems also receive revenue from the sale of available spots on
advertiser-supported programming.




                                      -5-
<PAGE>   6



THE SYSTEMS:

The following table sets forth certain operating statistics for the Systems for
the periods indicated:

<TABLE>
<CAPTION>

                                                           (dollars in thousands except per subscriber data)
                                              1995             1996             1997            1998 (1)         1999 (1)
                                              ----             ----             ----            --------         --------
<S>                                          <C>              <C>               <C>             <C>              <C>
Homes passed (2)                             128,908          129,291           129,291          138,040          129,600
Basic subscribers (3)                         80,190           78,449            78,197           84,755           71,864
Basic penetration (4)                          62.2%            60.7%             60.5%            61.4%            55.5%
Basic revenues (5)                           $26,914          $29,087           $29,978          $31,521          $30,737
Average monthly basic
   revenues per subscriber (6)                $27.93           $30.47            $31.92           $33.35           $34.18
Premium subscriptions (7)                     28,900           25,652            24,076           26,413           23,001
Premium penetration (8)                        36.0%            32.7%             30.8%            31.2%            32.0%
Average monthly total revenues
   per subscriber (6)                         $34.56           $36.89            $38.10           $39.95           $41.56
Average annual system operating
   cash flow per subscriber (9)                 $227             $238              $235             $233             $226
Average annual EBITDA per
   subscriber (10)                              $199             $207              $202             $195             $188
Miles of plant                                 3,483            3,483             3,483            3,883            3,254
</TABLE>


(1)  The figures shown for 1998 reflect the Company's purchase of its cable
     system serving Tazewell, Tennessee. The figures shown for 1999 reflect the
     Company's March 1999 sales of its cable systems serving Wartburg, Tennessee
     and Forsyth and Monroe County, Georgia (See "Part II - Item 7. Management's
     Discussion and Analysis of Financial Condition and Results of Operations -
     Sales of Cable Systems").
(2)  Homes passed refers to estimates by the Company of the number of dwelling
     units in a particular community that can be connected to the distribution
     system without any further extension of principal transmission lines. Such
     estimates are based upon a variety of sources, including billing records,
     house counts, city directories and other local sources.
(3)  For purposes of all information presented herein, and unless otherwise
     indicated, the number of basic subscribers for the Systems has been
     computed by adding the actual number of subscribers for all non-bulk
     accounts and the equivalent subscribers for all bulk accounts. The number
     of such equivalent subscribers has been calculated by dividing aggregate
     basic service revenues for bulk accounts by the full basic service rate for
     the community in which the account is located.
(4)  Basic subscribers as a percentage of homes passed.
(5)  Basic revenues consist of monthly subscription fees for all services (other
     than premium programming and Internet service) and monthly charges for
     customer equipment rental.
(6)  The average of the monthly revenues divided by the number of basic
     subscribers at the end of such month during the twelve-month periods ended
     December 31 for each year presented.
(7)  A customer may purchase more than one premium service, each of which is
     counted as a separate premium subscription.
(8)  Premium subscriptions as a percentage of basic subscribers.
(9)  System operating cash flow divided by the average number of basic
     subscribers for the period.
(10) EBITDA divided by the average number of basic subscribers for the period.



                                      -6-
<PAGE>   7



The Company's Systems are divided into seven geographic groups ("Clusters"). The
following table summarizes certain operating data at and for the year ended
December 31, 1999 for the individual clusters:

<TABLE>
<CAPTION>

                                                                                                     Average   Annualized
                                                                                                     Monthly     System
                                            Percent of                                                Total     Operating    System
                     Estimated              All Systems                                              Revenues   Cash Flow  Operating
                       Homes      Basic        Basic         Basic         Premium       Premium       per         per     Cash Flow
        Cluster       Passed   Subscribers  Subscribers   Penetration   Subscriptions  Penetration  Subscriber  Subscriber   Margin
        -------       ------   -----------  -----------   -----------   -------------  -----------  ----------  ----------   ------
<S>                  <C>       <C>          <C>           <C>           <C>            <C>          <C>        <C>         <C>
Oklahoma / Texas      33,300      16,101         22.4 %       48.4 %         5,067        31.5 %      $45.33       $254       46.7 %
Louisiana             25,700      12,890         17.9         50.2           4,584        35.6         43.63        248       47.4
Georgia               19,700      12,014         16.7         61.0           5,058        42.1         42.17        222       43.8
Colorado / Wyoming    15,100       9,178         12.8         60.8           3,044        33.2         40.11        194       40.3
Alabama               13,800       9,059         12.6         65.6           2,045        22.6         38.75        225       48.5
Florida               10,000       6,533          9.1         65.3           2,833        43.4         47.55        245       42.9
Tennessee             12,000       6,089          8.5         50.7             370         6.1         26.10        138       43.9
                     -------      ------        -----                       ------
        Totals       129,600      71,864        100.0 %       55.5 %        23,001        32.0 %      $41.56       $226       45.2 %
                     =======      ======        =====                       ======
</TABLE>

The Oklahoma/Texas Cluster. The Oklahoma/Texas Cluster is comprised of Systems
that were acquired in 1988 and 1989, and serves rural communities in
southeastern Oklahoma north of Dallas, Texas and in northern Texas northwest of
Fort Worth. Since 1988, the Company has made $12.9 million in capital
expenditures improving the plant and operations in this Cluster. These
improvements include upgrading many of the Systems to 450 MHz 60-channel
capacity plant, installing three microwave complexes (eliminating the need for
eight separate headends), and upgrading the Durant System to a 750 MHz hybrid
fiber optic-backbone/coaxial ("HFC") cable system, and supplementing its 450 MHz
cable plant in Decatur, Texas with fiber.

Since the completion of its 750 MHz upgrade in the Durant System, the Company
has been offering two-way high-speed Internet services to approximately 4,400
subscribers. The Company is currently offering one-way high-speed Internet
services to approximately 1,100 subscribers in its Decatur, Texas System and
once it completes the reverse path activation of the cable plant, it will begin
to offer its two-way high-speed Internet service. In addition to the high-speed
Internet services, the Company is offering traditional dial-up Internet services
to a certain portion of the Oklahoma/Texas Cluster. Currently, the
Oklahoma/Texas Cluster has approximately 600 high-speed Internet customers and
approximately 1,260 dial-up Internet customers. Approximately 1,000 of these
dial-up customers were purchased from International Software Consultants, Inc.
in February, 1999.

The administrative and customer service operations for this cluster are
consolidated into one main office located in Durant, Oklahoma. This office
provides customer support, billing, marketing and technical operations for the
Oklahoma/Texas Cluster. The primary employer in the Oklahoma/Texas Cluster's
area is the oil and gas industry. Small manufacturing companies also provide
employment, as does farming and ranching. At December 31, 1999, the number of
homes passed in the Oklahoma/Texas Cluster was estimated to be 33,300 and the
number of basic subscribers and premium subscriptions were 16,101 and 5,067,
respectively.

The Louisiana Cluster. The Louisiana Cluster is comprised of Systems that were
acquired in three transactions in 1988 and serves rural communities in Louisiana
and Texas located near Lake Charles, Louisiana. Since its acquisition of the
Systems in this Cluster, the Company has made $10.7 million in capital
expenditures, upgrading virtually all of these Systems to 450 MHz 60-channel
plants and installing three microwave complexes eliminating the need for eight
headends. At December 31, 1999, the estimated number of homes passed for this
Cluster was 25,700 and the number of basic subscribers and premium subscriptions
were 12,890 and 4,584, respectively.

During 1999 the Company completed the process of supplementing its cable plant
in and around Westlake, Louisiana with fiber. Since this process was completed,
the Company has been offering its one-way high-speed Internet services to
approximately 6,400 subscribers. As the Company completes the reverse path
activation of the cable plant, a portion of which has already been completed,
the subscribers will be offered the Company's two-way high-speed Internet
services. In addition, the Company offers traditional dial-up services to
certain areas of the Louisiana Cluster. Currently, the Louisiana Cluster has
approximately 100 high-speed Internet customers and approximately 50 dial-up
Internet customers.

Since acquiring the Louisiana Cluster, the Company has consolidated all
administrative, customer service, technical and marketing operations into one
central office located in Westlake, Louisiana.

The economy in southwestern Louisiana ranges from the farming and cattle
industry to the petro-chemical industry and gaming. Major employers in the area
include CITGO Petroleum Corporation, PPG Industries, Inc. and Conoco, Inc. The
introduction of riverboat



                                      -7-
<PAGE>   8



casinos on Lake Charles has become very popular due to the proximity to Houston,
and companies like Casino America, Inc. and Players International, Inc. have
become major employers in the area.

The Georgia Cluster. The Georgia Cluster is comprised of Systems that were
acquired in three transactions in 1988 and serves rural communities in central
Georgia located east of Atlanta and south of Macon. Since 1988, the Company has
made $11.7 million in capital improvements to the Georgia Cluster which has
included the installation of microwave complexes, which eliminated the need for
several headends, as well as improving the plant throughout the majority of the
Cluster. In addition, the Company has completed its 750 MHz upgrades to the
cable plant in Hawkinsville, Cochran, Eatonton, Madison and Gray.

Since the completion of its 750 MHz upgrade in Hawkinsville, Cochran, Eatonton,
Madison and Gray, the Company has been offering two-way high-speed Internet
services to approximately 6,500 subscribers. In addition to the high-speed
Internet services, the Company is offering traditional dial-up Internet services
to a certain portion of the Georgia Cluster. Currently, the Georgia Cluster has
approximately 200 high-speed Internet customers and approximately 410 dial-up
Internet customers.

On March 31, 1999 the Company sold its Forsyth and Monroe County Systems,
serving approximately 1,700 subscribers, to the City of Forsyth (See "Part II -
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Sales of Cable Systems").

At December 31, 1999, the Georgia Cluster passed an estimated 19,700 homes and
had 12,014 basic subscribers and 5,058 premium subscriptions. The Systems in
this Cluster operate primarily out of one office located in Eatonton, Georgia,
where all customer service, billing, marketing and technical operations are
centralized.

The Company believes that the economy in the Georgia Cluster's area is very
diversified. There are several large employers in the area, including the
corporate headquarters of Applebee's International, Inc., a regional restaurant
chain, and Warner Robbins Air Force Base.

The Colorado/Wyoming Cluster. The Colorado/Wyoming Cluster is comprised of
Systems that were acquired in 1988 and serves rural communities located east of
Denver, Colorado and north and west of Cheyenne, Wyoming. This geographically
diverse group of Systems is operated from a central office in Douglas, Wyoming.
Since these Systems were acquired, the Company has made $7.6 million in capital
expenditures to improve plant reliability, reception and service. The Company
also completed the 750 MHz HFC upgrade of the Systems serving approximately
5,500 subscribers in Douglas, Torrington, Wheatland and Lingle, Wyoming during
the first quarter of 1999.

With the completion of the 750 MHz upgrade in Douglas, Torrington, Wheatland and
Lingle, the Company began to offer its two-way high-speed Internet service to
the approximately 5,500 subscribers. During the first quarter of 1999 the
Colorado/Wyoming Cluster also began offering traditional dial-up Internet
service to a portion of its subscriber base. Currently, the Colorado/Wyoming
Cluster has approximately 290 high-speed Internet customers and approximately
680 dial-up Internet customers.

The economy in the Colorado/Wyoming Cluster's area is largely dependent on
ranching and farming, the oil and gas industry, and mining. At December 31,
1999, the estimated number of homes passed in this Cluster was 15,100 and the
number of basic subscribers and premium subscriptions were 9,178 and 3,044,
respectively.

The Alabama Cluster. The Company acquired the Systems comprising the Alabama
Cluster primarily in four transactions in 1988 and 1989. These Systems are
divided into two groups, with one group serving the rural communities located on
the western edge of the state west of Birmingham, Alabama, and the other group
serving communities located south and east of Birmingham, between Birmingham and
Atlanta, Georgia. Since its acquisition of the Systems in this Cluster, the
Company has made $5.8 million in capital expenditures, improving the channel
capacity in many of these Systems and improving reliability and channel
offerings. In the Systems serving eastern Alabama, six separate headends have
been consolidated into one microwave complex.

In addition to the improvements described above, construction to upgrade the
cable plant serving approximately 2,300 subscribers in Roanoke and Wadley,
Alabama to 750 MHz was completed during 1999. Since this upgrade was completed
the Company has been offering its two-way high-speed Internet service in Roanoke
as well as traditional dial-up Internet service to a portion of its Alabama
Cluster. Currently, the Alabama Cluster has approximately 110 high-speed
Internet customers and approximately 130 dial-up Internet customers.

The operations of the Alabama Cluster are managed from one main office located
in Roanoke, Alabama. All customer service, administrative, technical and
marketing functions have been centralized into the main office. The Alabama
Cluster, as of December 31, 1999, passed an estimated 13,800 homes and had 9,059
basic subscribers and 2,045 premium subscriptions.




                                      -8-
<PAGE>   9

The communities served by the Alabama Cluster benefit from a number of small and
large manufacturing companies in the area, including 3M and Wrangler. In
addition, Mercedes-Benz has recently completed a large manufacturing plant in
Tuscaloosa, Alabama, just south of the Company's Systems serving western
Alabama.

The Florida Cluster. The Florida Cluster is comprised of Systems that were
acquired in 1988 and serves several rural communities located near Gainesville,
Florida. Since May 1988, the Company has made $6.6 million in capital
expenditures in this Cluster. The Company has installed a microwave complex,
which eliminated the need for three headends, and has upgraded the majority of
its cable television plant in this Cluster to 450 MHz with 60 channels of
capacity. The majority of the Systems in this Cluster have been consolidated on
one microwave complex, which reduced maintenance and equipment costs.

The Company is currently offering its one-way high-speed Internet service to its
High Springs and Alachua Systems, as well as traditional dial-up Internet
service to a portion of the Florida Cluster. Currently, the Florida Cluster has
approximately 40 high-speed Internet customers and approximately 130 dial-up
Internet customers.

The Company's Florida Cluster operates from a centralized office in High
Springs, Florida. All administrative, customer service, technical and marketing
functions are coordinated from this location. The Florida Cluster, as of
December 31, 1999, passed an estimated 10,000 homes and had 6,533 basic
subscribers and 2,833 premium subscriptions.

The University of Florida, located in Gainesville, has contributed to the
economic stability of the Florida Cluster's areas. Other industries providing
employment in the area include agriculture, ranching and tourism.

The Tennessee Cluster. The Company acquired the Systems comprising the Tennessee
Cluster in one transaction on December 10, 1998. These Systems serve rural
communities located Northeast of Knoxville, Tennessee. All administrative,
technical and marketing functions are coordinated out of one central office
located in Tazewell, Tennessee.

Since acquiring this Cluster, the Company has spent $2.4 million on capital
expenditures, the majority of which is for the 750 MHz HFC upgrade that is
currently in process. Once this upgrade is complete, which is expected to occur
in early 2001, the Company will be offering its two-way high-speed Internet
services to the approximately 6,100 subscribers. During 1999, the Company began
offering its dial-up Internet service and currently has approximately 370
dial-up Internet customers.

The economies of the communities served by the Tennessee Cluster benefit from
many furniture manufacturers as well as medical supply manufacturers and the
agriculture industry. As of December 31, 1999, the Tennessee Cluster passed an
estimated 12,000 homes and had 6,089 basic subscribers and 370 premium
subscriptions.

On March 5, 1999 the Company sold its entire cable system in Wartburg, Tennessee
(See "Part II - Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Sales of Cable Systems").

PROGRAMMING AND SUBSCRIBER RATES:

The Company has various contracts to obtain basic, satellite and premium
programming for the Systems from program suppliers, including, in limited
circumstances, some broadcast stations, with compensation generally based on a
fixed fee per customer or a percentage of the gross receipts for the particular
service. Some program suppliers provide volume discount pricing structures
and/or offer marketing support. In addition, the Company is a member of a
programming consortium consisting of small to medium sized multiple system
operators and individual cable systems serving, in the aggregate, over ten
million cable subscribers. The consortium helps create efficiencies in the areas
of securing and administering programming contracts, as well as to establish
more favorable programming rates and contract terms for small and medium sized
cable operators. The Company does not have long-term programming contracts for
the supply of a substantial amount of its programming, due in part to ongoing
negotiations with a number of its programming suppliers, but also due to the
Company's belief that it is in its best interests to enter into long-term
programming contracts only if additional benefits are derived from the
contractual arrangements. In cases where the Company does have such contracts,
they are generally for fixed periods of time ranging from one to five years and
are subject to negotiated renewal. While the loss of contracts with certain of
the Company's programming suppliers could have an adverse effect on its results
of operations, management does not believe the risk of such a loss is
particularly great due to the substantial motivation of programming suppliers to
obtain the widest possible audience for their products.

Cable programming costs are expected to continue to increase primarily due to
additional programming being provided to subscribers, increased costs to
purchase cable programming and inflationary increases. In 1997, 1998 and 1999,
programming costs as a percentage of revenues were 18.3%, 19.9% and 20.1%,
respectively. No assurance can be given that the Company's programming costs
will not increase substantially in the near future or that other materially
adverse terms will not be added to its programming contracts.



                                      -9-
<PAGE>   10

The Systems offer their subscribers programming that includes the local network,
independent and educational television stations, a limited number of television
signals from distant cities, numerous satellite-delivered, non-broadcast
channels (such as CNN, MTV, USA, ESPN and TNT) and in some systems local
information and public access channels. The programming offered by the Company
varies among the Systems depending upon each System's channel capacity and
viewer interests. Primarily for competitive reasons, the Company generally
endeavors to offer a single level of basic service containing all broadcast and
satellite-delivered programming. In a few Systems, however, the Company does
offer two tiers of basic cable television programming: a broadcast basic
programming tier (consisting generally of network and public television signals
available over-the-air) and a satellite programming tier (consisting generally
of satellite-delivered programming such as CNN, USA, ESPN and TNT). The Company
also offers premium programming services, both on a per-channel basis and, in
many Systems, as part of premium service packages as well as multiple tiers of
digital satellite service through HITS.

Monthly subscriber rates for services vary from market to market, primarily
according to the amount of programming provided. At December 31, 1999, the
Company's monthly full basic service rates for residential subscribers ranged
from $13.95 to $39.99 and per-channel premium service rates (not including
special promotions) ranged from $5.95 to $12.95 per service. At December 31,
1999, the weighted average price for the Company's monthly full basic service
was approximately $35.25.

A one-time installation fee, which the Company may wholly or partially waive
during a promotional period, is usually charged to new subscribers. The Company
charges monthly fees for converters and remote control tuning devices. The
Company also charges administrative fees for delinquent payments for service.
Subscribers are free to discontinue service at any time without additional
charge but may be charged a reconnection fee to resume service. Commercial
customers, such as hotels, motels and hospitals, are charged a negotiated,
non-recurring fee for installation of service and monthly fees. Multiple
dwelling unit accounts may be offered a bulk rate in exchange for single-point
billing and basic service to all units.

In addition to subscriber fees, the Company derives a small amount of revenue
from the sale of local spot advertising time on locally originated and
satellite-delivered programming. The Company also derives modest amounts of
revenues from affiliations with home shopping services (which offer merchandise
for sale to subscribers and compensate system operators with a percentage of
their sales receipts).

Other potential sources of revenue for cable television systems include the
lease of tower space to cellular telephone, personal communications services
("PCS"), and paging companies and other transmission businesses and the sale of
programming featuring movies and special events to customers on a pay-per-view
basis, which the Company can now offer through its HITS service.

While the Company also offers advanced telecommunications services (including
Internet services as discussed below), it anticipates that monthly subscriber
fees from cable television will continue to constitute the majority of its total
revenues for the foreseeable future.

INTERNET SERVICES:

As of December 31, 1999 the Company had the capabilities of providing its
high-speed Internet service, via either one-way or two-way, to approximately
30,000 of its basic cable subscribers. In addition, the Company, as of December
31, 1999, was offering its traditional dial-up Internet services to over 50% of
its cable subscribers.

The two-way high-speed Internet service, which utilizes a cable modem, provides
Internet access at speeds of up to 1.5 Megabits per second. The two-way
high-speed Internet service does not require a phone line for access since all
transmissions are through the customers cable television equipment. The one-way
high-speed Internet service is a hybrid between the two-way high-speed and
traditional dial-up services. With the one-way high-speed Internet service, the
customer dials in to the server over a traditional phone line but receives
information over the cable television equipment. Thus, while the upstream
connection is at a maximum speed of 56 Kilobits per second, the downstream
access can achieve speeds of up to 1.5 Megabits per second. The traditional
dial-up Internet service offered by the Company is similar to dial-up services
offered by companies such as America Online or The Microsoft Network. With
dial-up Internet service, the customer sends and receives information over a
traditional phone line with speeds of up to 56 Kilobits per second.

Monthly rates charged to Internet customers vary based on the type of service
they receive. In some of the Systems a discount is given to those Internet
customers who also receive the Company's cable television service. At December
31, 1999, the Company's monthly Internet rate varied from $17.95, for a dial-up
customer who also receives cable television, to $54.95 for high-speed commercial
customers.




                                      -10-
<PAGE>   11


CUSTOMER SERVICE AND MARKETING:

The Company emphasizes customer service, which it believes is increasingly
important to the successful operation of its business. To meet its objective of
providing high levels of customer service, the Company offers its customers a
full line-up of programming, timely and reliable service (with virtually all
service inquiries responded to within 24 hours) and good picture quality. The
Company's employees receive ongoing training in customer service, sales and
subscriber retention, and technical support. Customer service representatives
and technicians are also trained to market upgrades at the point of sale or
service. In addition, the Company has attempted to establish and to maintain a
local presence and visibility within the communities it serves.

As part of its efforts to maximize cash flow, and in response to increasing
competition, the Company has attempted to add and retain subscribers and
increase cash flow per subscriber by aggressively marketing its basic and
premium service offerings as well as its Internet and HITS services. To this
end, the Company utilizes a number of coordinated marketing techniques,
including (i) direct door to door sales, (ii) local newspaper and radio
advertising and cable system promotional advertising insertion in certain
satellite programs, (iii) direct mail, (iv) telemarketing, primarily for premium
service subscriptions, and (v) monthly billing statement inserts. There can be
no assurance that the Company's efforts in this area will be successful. See "-
Competition" and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Forward Looking Information."

TECHNICAL OVERVIEW:

The following table sets forth certain information, as of December 31, 1999,
regarding the analog channel capacities and miles of plant of the Systems:

<TABLE>
<CAPTION>

                                           300 MHZ         330 MHZ         400 MHZ         450 MHZ         750 MHZ
                                           UP TO 36        UP TO 42        UP TO 54        UP TO 62       UP TO 100
                                           CHANNELS        CHANNELS        CHANNELS        CHANNELS       CHANNELS          TOTAL
                                           --------        --------        --------        --------       --------          -----
<S>                                        <C>             <C>             <C>             <C>            <C>              <C>
Number of headends (1)                          11              16               1             13               8              49
Number of subscribers as of
   December 31, 1999 (1)                    14,401          10,447             418         27,885          18,713          71,864
% of subscribers                              20.0%           14.5%            0.6%          38.8%           26.1%          100.0%
Miles of Plant                                 786             488               6          1,244             730           3,254
% of miles of plant                           24.2%           15.0%            0.2%          38.2%           22.4%          100.0%
</TABLE>


    (1)  Some of the Company's headends have subscribers on multiple bandwidth
         levels. In these instances the headend has been included in the highest
         bandwidth category offered but the subscribers have been allocated to
         their actual bandwidth category.

The Company is currently in the construction phase of its 750 MHz upgrade to the
cable plant for its Tennessee Cluster which serves approximately 6,100
subscribers. Upon completion of the Tennessee upgrade, which is expected to
occur during 2001, and with the upgrades that have already been completed, the
Company will have the ability to provide advanced telecommunications services to
approximately 50% of its December 31, 1999 subscriber base.

The Company is continually in the process of identifying other areas within its
Systems which can be upgraded to allow for the introduction of advanced
telecommunications services. However, the Company will only proceed with
upgrades which it believes are economically feasible after carefully weighing
the anticipated revenues against the costs of completing the upgrade.

The Company utilizes a "trap" scheme, except in the Tennessee Cluster which
utilizes addressable converters, whereby a technician installs filters, or
traps, at each cabled home enabling the technician to configure the programming
received by each subscriber. Upon completion of a System upgrade, the Company
will enable digital addressable technology to certain of its subscribers to take
advantage of the HITS service. That service transmits digitally compressed
signals of niche satellite programming, multiplexed premium services,
pay-per-view movies and music for reception by cable systems, which in turn
deliver them to their subscribers.

While some of the Company's Systems are wired exclusively with coaxial cable;
the remaining Systems utilize fiber optic cable in conjunction with coaxial
cable. 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. The Company plans to use an
HFC design across those portions of its cable plant that serve its highest
subscriber densities to most efficiently upgrade the Systems. Additionally, the
Company plans to use fiber optic technology to interconnect certain headends and
install fiber backbones to reduce amplifier cascades, thereby gaining
operational efficiencies and improved picture quality and system reliability.


                                      -11-
<PAGE>   12


FRANCHISES:

Cable television systems are generally constructed and operated under
non-exclusive franchises granted by local governmental authorities. These
franchises typically contain many conditions, such as, among others, (i) time
limitations on commencement and completion of construction, (ii) conditions of
service, including number of channels, types of programming and the provision of
free service to schools and certain other public institutions and (iii) the
maintenance of insurance and indemnity bonds. Certain provisions of local
franchises are subject to federal regulation under the Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act"), and the
Telecommunications Act of 1996 (the "1996 Telecom Act").

At December 31, 1999, the Company held 120 franchises. These franchises,
substantially all of which are non-exclusive, generally provide for the payment
of fees to the issuing authority. Annual franchise fees range up to 5% of the
gross revenues generated by a System. For the past three years, franchise fee
payments made by the Company have averaged approximately 2.7% of total gross
System revenues. Franchise fees are generally passed directly through to the
customers on their monthly bills. General business or utility taxes may also be
imposed in various jurisdictions. The 1984 Cable Act prohibits franchising
authorities from imposing franchise fees in excess of 5% of gross revenues and
also permits the cable operator to seek renegotiation and modification of
franchise requirements if warranted by changed circumstances. Most of the
Company's franchises can be terminated prior to their stated expirations for
uncured breaches of material provisions.

The following table sets forth the number of franchises by year of franchise
expiration and the number and percentage of basic subscribers at December 31,
1999:

<TABLE>
<CAPTION>

                                                     PERCENTAGE            NUMBER           PERCENTAGE
             YEAR OF                 NUMBER OF        OF TOTAL            OF BASIC        OF TOTAL BASIC
       FRANCHISE EXPIRATION          FRANCHISES      FRANCHISES          SUBSCRIBERS       SUBSCRIBERS
       --------------------          ----------      ----------          -----------       -----------
<S>                                  <C>             <C>                 <C>              <C>
Prior to 2002                             8               6.0 %              2,834               3.9 %
2002 - 2006                              35              26.3               18,426              25.6
2007 - 2010                              29              21.8               19,935              27.7
2011 and after                           44              33.1               24,991              34.9
No expiration date                        4               3.0                1,404               2.0
                                        ---             -----               ------             -----
     Subtotal                           120              90.2               67,590              94.1
No franchise required                    13               9.8                4,274               5.9
                                        ---             -----               ------             -----
     Total                              133             100.0 %             71,864             100.0 %
                                        ===             =====               ======             =====
</TABLE>

The Company believes that it has good relationships with its franchising
authorities. To date, the Company has never had a franchise revoked for any of
its Systems, and no request by the Company for a franchise renewal or extension
has been denied, although such renewals and extensions have frequently entailed
mutually acceptable franchise modifications.

The 1984 Cable Act provides for, among other things, an orderly franchise
renewal process in which renewal of franchise licenses issued by governmental
authorities will not be unreasonably withheld, or, if renewal is withheld and
the franchise authority chooses to acquire the system or transfer ownership to
another person, such franchise authority or other person must pay the operator
either (i) the "fair market value" (without value assigned to the franchise) for
the system covered by such franchise if the franchise did not exist before the
effective date of the 1984 Cable Act (December 1984) or the franchise was
pre-existing but the franchise agreement did not provide for a buyout or (ii) in
the case of pre-existing franchises with buyout provisions, the price set forth
in such franchise agreements. In addition, the 1984 Cable Act established
comprehensive renewal procedures which require that an incumbent franchisee's
renewal application be assessed on its own merits and not as part of a
comparative process with competing applications.

The 1984 Cable Act also established buyout rates for franchises which post-date
the existence of the 1984 Cable Act or pre-date the 1984 Cable Act but the
franchise agreement does not contain buyout provisions; in the event the
franchise is terminated "for cause" and the franchise authority desires to
acquire the system, the franchise authority must pay the operator an "equitable"
price. To date, none of the Company's franchises has been terminated.

The 1992 Cable Act prohibits the award of exclusive franchises, prohibits
franchising authorities from unreasonably refusing to award additional
franchises and permits them to operate cable systems themselves without
franchises. 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. State and
local authorities retain authority to manage the public rights of way and
"competitively neutral" requirements concerning right of way fees, universal
service, public safety and welfare, service quality, and consumer protection are
permitted with respect to telecommunications services.


                                      -12-
<PAGE>   13
COMPETITION:

Cable television systems face competition from alternative methods of receiving
and distributing television signals and from other sources of news, information
and entertainment such as off-air television broadcast programming, DBS
services, wireless cable services, newspapers, movie theaters, live sporting
events, online computer services and home video products, including videotape
cassette recorders. The extent to which a cable communications system is
competitive depends, in part, upon the cable system's ability to provide, at a
reasonable price to customers, a greater variety of programming and other
communications services than those which are available off-air or through other
alternative delivery sources and upon superior technical performance and
customer service.

Cable television systems generally operate pursuant to franchises granted on a
nonexclusive basis. The 1992 Cable Act prohibits franchising authorities from
unreasonably denying requests for additional franchises and permits franchising
authorities to operate cable television systems without a franchise. It is
possible that a franchising authority might grant a second franchise to another
company containing terms and conditions more favorable than those afforded the
Company.

Well-financed businesses from outside the cable industry (such as the public
utilities that own the poles to which cable is attached) may become competitors
for franchises or providers of competing services. Congress has repealed the
prohibition against national television networks owning cable systems, and
telephone companies may now enter the cable industry as described below. In
addition, beginning in 1997, there has been a significant increase in the number
of cities that have constructed their own cable television systems in a manner
similar to city-provided utility services. These systems typically will compete
directly with the existing cable operator without the burdens of franchise fees
or other local regulation. Although the total number of municipal overbuild
cable systems remains small, there appears to be an increasing trend in cities
authorizing such direct municipal competition with cable operators.

In recent years, the Federal Communications Commission ("FCC") and the Congress
have adopted policies providing a more favorable operating environment for new
and existing technologies that provide, or have the potential to provide,
substantial competition to cable television systems. These technologies include,
among others, DBS service, whereby signals are transmitted by satellite to
satellite dishes as small as eighteen inches located the on customer premises.
Programming is currently available to the owners of DBS dishes through
conventional, medium and high-powered satellites. DBS systems have increased
channel capacity to over 100, enabling them to provide movies, broadcast
stations, high-speed Internet access, and other program service comparable to
those of cable television systems. DBS is currently being heavily marketed on a
nationwide basis by two specific providers and is a significant competitor to
traditional hardline cable service providers, including the Company.

The 1992 Cable Act contains provisions, which the FCC has implemented with
regulations, to enhance the ability of cable competitors to purchase and make
available to home satellite dish owners certain satellite delivered cable
programming at competitive costs. Digital satellite service ("DSS") offered by
DBS systems has certain advantages over cable systems with respect to
programming and digital quality, as well as disadvantages that include high
costs for additional outlets and a lack of local broadcast programming in
smaller markets, service and equipment distribution. With respect to local
broadcast television programming, recent legislation has removed legal obstacles
to the retransmission of such programming to DBS subscribers. DBS providers are
now making local broadcast programming available in certain larger markets. If
subsequent rural loan legislation is enacted, local broadcast programming may
become available to DBS subscribers in smaller markets. In rural markets it may
not be cost effective for DBS providers to provide local programming unless it
is subsidized by the federal government. The Company's strategy of providing
pay-per-view and satellite niche programming via the HITS application in certain
of its Systems is designed to combat DSS competition. "Bundling" of the
Company's video service with Internet services and other advanced
telecommunications services in certain of the Company's Systems may also be an
effective tool for combating DSS competition. The principal DBS systems with
which the Company's Systems compete are DirectTV and Echostar.

Cable television systems also compete with wireless program distribution
services such as multichannel multipoint distribution service ("MMDS") which
uses low power microwaves to transmit video programming and high speed data
services, including Internet access, over the air to customers. Additionally,
the FCC has licensed Local Multipoint Distribution Service ("LMDS") systems,
which can provide multichannel wireless video services in the 28 gigahertz
("GHz") band and has scheduled auctions in the future for licenses in the 24 GHz
and 39 GHz bands. LMDS is also suited for providing wireless data services,
including the possibility of Internet access. Wireless distribution services
generally provide many of the programming services provided by cable systems,
and digital compression technology has increased significantly the channel
capacity of the systems. Because MMDS service requires unobstructed "line of
sight" transmission paths, the ability of wireless distribution systems to
compete may be hampered in some areas by physical terrain and foliage. Although
prohibitive topography and limited "line of sight" access have limited
competition from wireless distribution systems in a majority of the Company's
franchise service areas, the Company has experienced such competition in
portions of its Systems in Oklahoma, Texas, Louisiana and Florida.

The 1996 Telecom Act eliminated the previous prohibition on the provision of
video programming by local exchange telephone companies ("LECs") in their
telephone service areas. Various LECs currently are seeking to provide video
programming services within their telephone service areas through a variety of
distribution methods, primarily through the deployment of broadband wire

                                      -13-
<PAGE>   14

facilities, but also through the use of wireless (MMDS) transmission. Cable
television systems could be placed at a competitive disadvantage if the delivery
of video programming services by LECs becomes widespread, since LECs may not be
required, under certain circumstances, to obtain local franchises to deliver
such video services or to comply with the variety of obligations imposed upon
cable television systems under such franchises. Issues of cross-subsidization by
LECs of video and telephony services also pose strategic disadvantages for cable
operators seeking to compete with LECs that provide video services. The Company
believes, however, that the small markets in which it provides, or expects to
provide, cable services are unlikely to support competition in the provision of
video and broadband telecommunications services given the lower population
densities and higher costs per subscriber of installing plant.

Although LECs and cable operators can now expand their offerings across
traditional service boundaries, the general prohibition on LEC buyouts (i.e. any
ownership interest exceeding ten percent) of co-located cable systems, cable
operator buyouts of co-located LEC systems and joint ventures between cable
operators and LECs in the same market remains in place. The 1996 Telecom Act
provides a few limited exceptions to this buyout prohibition, including a "rural
exemption." The 1996 Telecom Act also provides the FCC with limited authority to
grant waivers of the buyout prohibition (subject to local franchising authority
approval). The Company believes that significant growth opportunities exist by
establishing cooperative rather than competitive relationships with LECs within
service areas, to the extent permitted by law.

The entry of electric utility companies into the cable business, which was
authorized by the 1996 Telecom Act, could also have an adverse affect on the
Company's business. In addition, well capitalized businesses from outside of the
cable industry may become competitors for franchises or providers of competing
services.

Other new technologies may become competitive with non-entertainment services
that cable television systems can offer. The FCC has authorized television
broadcast stations to transmit textual and graphic information useful both to
consumers and businesses. The FCC also permits commercial and noncommercial FM
stations to use their subcarrier frequencies to provide non-broadcast services
including data transmissions. The FCC has established an over-the-air
Interactive Video and Data Service that will permit two-way interaction with
commercial and educational programming along with informational and data
services. The expansion of fiber optic systems, as well as the introduction of
new xDSL services, by LECs and other common carriers provide facilities for the
transmission and distribution to homes and businesses of video services,
including interactive computer-based services like the Internet, data and other
non-video services. In addition, wireless Internet access is now offered in some
markets by cellular, PCS and other mobile service providers, such as Nextel.

Advances in communications technology as well as changes in the marketplace and
the regulatory and legislative environments are constantly occurring. Thus, it
is not possible to predict the effect that ongoing or future developments might
have on the cable industry or on the operations of the Company.

LEGISLATION AND REGULATION:

General. The operation of cable television systems is extensively regulated by
the FCC, some state governments and most local governments. The 1996 Telecom Act
alters the regulatory structure governing the nation's telecommunications
providers. It removes barriers to competition in both the cable television
market and the local telephone market. Among other things, it also reduces the
scope of cable rate regulation.

The 1996 Telecom Act requires the FCC to undertake a host of implementing
rulemakings, the final outcome of which cannot yet be determined. Moreover,
Congress and the FCC have frequently revisited the subject of cable regulation.
Future legislative and regulatory changes could adversely affect the Company's
operations. This section briefly summarizes key laws and regulations affecting
the operation of the Company's Systems and does not purport to describe all
present, proposed, or possible laws and regulations affecting the Company or its
Systems.

Cable Rate Regulation. The 1992 Cable Act imposed an extensive rate regulation
regime on the cable television industry. Under that regime, all cable systems
are subject to rate regulation, unless they face "effective competition" in
their local franchise area. Federal law now defines "effective competition" on a
community-specific basis as requiring either low penetration (less than 30%) by
the incumbent cable operator, appreciable penetration (more than 15%) by
competing multichannel video providers ("MVPs"), or the presence of a competing
MVP affiliated with a local telephone company.

Although the FCC rules control, local government units (commonly referred to as
local franchising authorities or "LFAs") are primarily responsible for
administering the regulation of the lowest level of cable -- the basic service
tier ("BST"), which typically contains local broadcast stations and public,
educational, and government ("PEG") access channels. Before an LFA begins BST
rate regulation, it must certify to the FCC that it will follow applicable
federal rules, and many LFAs have voluntarily declined to exercise this
authority. LFAs also have primary responsibility for regulating cable equipment
rates. Under federal law, charges for various types of cable equipment must be
unbundled from each other and from monthly charges for programming services.



                                      -14-
<PAGE>   15

The FCC formerly administered rate regulation of cable programming service tiers
("CPST"), which typically contain satellite-delivered programming. However, the
1996 Telecom Act eliminated CPST regulation effective March 31, 1999.
Accordingly, the FCC cannot act on CPST rate increases that occur after that
date.

Under the FCC's rate regulations, most cable systems were required to reduce
their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage. The FCC has modified its rate
adjustment regulations to allow for annual rate increases and to minimize
previous problems associated with regulatory lag. Operators also have the
opportunity of bypassing this "benchmark" regulatory scheme in favor of
traditional "cost-of-service" regulation in cases where the latter methodology
appears favorable. Premium cable services offered on a per-channel or
per-program basis remain unregulated, as do affirmatively marketed packages
consisting entirely of new programming products. Federal law requires that the
BST be offered to all cable subscribers, but limits the ability of operators to
require purchase of any CPST before purchasing premium services offered on a
per-channel or per-program basis.

In an effort to ease the regulatory burden on small cable systems, the FCC has
created special rate rules applicable for systems with fewer than 15,000
subscribers owned by an operator with fewer than 400,000 subscribers. The
special rate rules allow for a vastly simplified cost-of-service showing. The
Company is eligible for these simplified cost-of-service rules, and has
calculated its rates generally in accordance with those rules. The 1996 Telecom
Act provides additional relief for small cable operators. For franchising units
with less than 50,000 subscribers and owned by an operator with less than one
percent of the nation's cable subscribers (i.e. approximately 600,000
subscribers) that is not affiliated with any entities with aggregate annual
gross revenues exceeding $250 million, CPST rate regulation was automatically
eliminated by the 1996 Telecom Act.

Although FCC regulation of CPST rates for all systems (regardless of size)
expired on March 31, 1999, critics of the cable television industry have called
for more rigorous rate regulation (including limits on programming cost
pass-throughs to cable subscribers) until a greater degree of competition to
incumbent cable operators has developed. The 1996 Telecom Act also relaxes
existing uniform rate requirements by specifying that uniform rate requirements
do not apply where the operator faces "effective competition," and by exempting
bulk discounts to multiple dwelling units, although complaints about predatory
pricing still may be made to the FCC.

Cable Entry Into Telecommunications. The 1996 Telecom Act provides that no state
or local laws or regulations may prohibit or have the effect of prohibiting any
entity from providing any interstate or intrastate telecommunications service.
States are authorized, however, to impose "competitively neutral" requirements
regarding universal service, public safety and welfare, service quality, and
consumer protection. State and local governments also retain their authority to
manage the public rights-of-way and may require reasonable, competitively
neutral compensation for management of the public rights-of-way when cable
operators provide telecommunications service. The favorable pole attachment
rates afforded cable operators under federal law can be gradually increased by
utility companies owning the poles (beginning in 2001) if the operator provides
telecommunications service, as well as cable service, over its plant.

Cable entry into telecommunications will be affected by the regulatory landscape
now being fashioned by the FCC and state regulators. One critical component of
the 1996 Telecom Act to facilitate the entry of new telecommunications providers
(including cable operators) is the interconnection obligation imposed on all
telecommunication carriers. The Supreme Court, in January 1999, upheld the FCC's
authority to adopt pricing rules for unbundled network elements and resale by
competitive LEC's. The FCC's pricing rules may be subject to further judicial
review.

Telephone Company Entry into Cable Television. The 1996 Telecom Act allows
telephone companies to compete directly with cable operators by repealing the
historic telephone company/cable cross-ownership ban. LECs, including the Bell
Operating Companies, can now compete with cable operators both inside and
outside their telephone service areas. Because of their resources, LECs could be
formidable competitors to traditional cable operators, and certain LECs have
begun offering cable service.

Under the 1996 Telecom Act, a LEC, utility company, or other entity providing
video programming to subscribers through wired facilities will be regulated as a
traditional cable operator (subject to local franchising and federal regulatory
requirements), unless an election is made to provide the video programming via
an "open video system" ("OVS"). To qualify for OVS status, two-thirds of the
system's activated channels must be reserved for unaffiliated entities. The
Fifth Circuit Court of Appeals recently reversed certain of the FCC's OVS rules,
including the FCC's preemption of local franchising.

Although LECs and cable operators can now expand their offerings across
traditional service boundaries, the general prohibition on LEC buyouts (that is,
any ownership interest exceeding 10 percent) of co-located cable systems, cable
operator buyouts of co-located LEC systems, and joint ventures between cable
operators and LECs in the same market remains in place. The 1996 Telecom Act
provides a few limited exceptions to this buyout prohibition, including a "rural
exemption." The 1996 Telecom Act also provides the FCC with the limited
authority to grant waivers of the buyout prohibition (subject to LFA approval).




                                      -15-
<PAGE>   16

Electric Utility Entry Into Telecommunications/Cable Television. 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. Electric utilities
must establish separate subsidiaries, known as "exempt telecommunications
companies" and must apply to the FCC for operating authority. Again, because of
their resources, electric utilities could be formidable competitors to
traditional cable companies.

Additional Ownership Restrictions. The 1996 Telecom Act eliminates statutory
restrictions on broadcast/cable cross-ownership (including broadcast
network/cable restrictions), but leaves in place existing FCC regulations
prohibiting local cross-ownership between co-located television stations and
cable systems. The 1996 Telecom Act leaves in place existing restrictions on
cable cross-ownership with satellite master antenna television ("SMATV") and
MMDS facilities, but lifts those restrictions where the cable operator is
subject to effective competition. FCC regulations permit cable operators to own
and operate separate SMATV systems within their franchise area, provided that
such operation is consistent with local cable franchise requirements.

Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a cable system
from devoting more than 40% of its activated channel capacity to the carriage of
affiliated national program services. A companion rule establishes a nationwide
ownership cap on any cable operator equal to 30% of all nationwide subscribers
to multichannel video programming distributors, including cable and DBS
subscribers. The FCC has stayed this horizontal ownership rule pending further
judicial review.

There are no federal restrictions on non-U.S. entities having an ownership
interest in cable television systems or the FCC licenses commonly employed by
such systems.

Must Carry/Retransmission Consent. The 1992 Cable Act conveyed to a commercial
broadcaster the right generally to elect every three years either to require (i)
the local cable operator to carry its signals ("must carry") or (ii) that such
operator obtain the broadcaster's retransmission consent before doing so. In
order to satisfy these requirements the Company has agreed, in limited
circumstances, to the direct payment of nominal fees for carriage and, again in
limited circumstances, to carry satellite-delivered cable programming which is
affiliated with the network carried by such stations. Currently, the Company has
agreements in place for the majority of its broadcast channels and is involved
in ongoing discussions with the balance of the broadcasters to obtain an
agreement. The Company believes that it will be able to successfully reach an
agreement with the majority of the remaining broadcasters so that its compliance
with the "retransmission consent" and "must carry" provisions of the 1992 Cable
Act will not have a material effect on its operations, 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. In
particular, the burden associated with must carry obligations could dramatically
increase if television broadcast stations proceed with planned conversions to
digital transmissions and if the FCC determines that cable systems must carry
all analog and digital signals transmitted by the television stations. A
rulemaking is now pending at the FCC regarding the imposition of dual digital
and analog must carry provisions.

Access Channels. LFAs can include franchise provisions requiring cable operators
to set aside certain channels for public, educational and governmental access
programming. Federal law also requires cable systems to designate a portion of
their channel capacity (up to 15% in some cases) for commercial leased access by
unaffiliated third parties. The FCC has adopted rules regulating the terms,
conditions and maximum rates a cable operator may charge for use of this
designated channel capacity, but, to date, use of commercial leased access
channels has been relatively limited.

Access to Programming. To spur the development of independent cable programmers
and competition to incumbent cable operators, 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 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. Recently, there has been increased
interest in further restricting the marketing practices of cable programmers,
including the possibility of subjecting video programmers who are not affiliated
with cable operators to all program access requirements. In addition, some cable
industry critics have argued that vertically integrated, non-satellite
programming (such as certain regional sports networks), which are now exempt
from the ban on exclusive programming, should be subjected to this prohibition.

Inside Wiring. The FCC has determined that an incumbent cable operator can be
required by the owner of a multiple dwelling unit ("MDU") complex to remove,
abandon or sell the "home run" wiring it initially provided. In addition, the
FCC is reviewing the enforceability of contracts to provide exclusive video
services within a MDU complex. The FCC has proposed abrogating all such
contracts held by incumbent cable operators, but allowing such contracts when
held by new entrants. These changes, and others now being considered by the FCC,
would, if implemented, make it easier for a MDU complex owner to terminate
service from an incumbent cable operator in favor of a new entrant and leave the
already competitive MDU sector even more challenging for incumbent cable
operators. In a separate proceeding, the FCC has preempted restrictions on the
deployment of private antennas, including DBS receivers, on rental property
within the exclusive use of a tenant (such as balconies and patios).



                                      -16-
<PAGE>   17
Other FCC Regulations. In addition to the FCC regulations noted above, there are
other FCC regulations covering such areas as equal employment opportunity,
subscriber privacy, programming practices (including, among other things,
syndicated program exclusivity, network program nonduplication, local sports
blackouts, indecent programming, lottery programming, political programming,
sponsorship identification, children's programming advertisements, and closed
captioning), registration of cable systems and facilities licensing, maintenance
of various records and public inspection files, frequency usage, lockbox
availability, antenna structure notification, tower marking and lighting,
consumer protection and customer service standards, technical standards,
consumer electronics equipment compatibility, and Emergency Alert Systems. The
FCC recently stated that cable customers must be allowed to purchase cable
converters from third party vendors, and established a multi-year phase-in
during which security functions (which would remain in the operator's exclusive
control) would be unbundled from basic converter functions (which could then be
satisfied by third party vendors). Details regarding this phase-in are still
under FCC review. The FCC has the authority to enforce its regulations through
the imposition of substantial fines, the issuance of cease and desist orders
and/or the imposition of other administrative sanctions, such as the revocation
of FCC licenses needed to operate certain transmission facilities used in
connection with cable operations.

The FCC is currently considering whether cable customers must be allowed to
purchase cable converters from third party vendors. If the FCC concludes that
such distribution is required, and does not make appropriate allowances for
signal piracy concerns, it may become more difficult for cable operators to
combat theft of service.

Internet Service Regulation. Although there is no significant federal regulation
of cable system delivery of Internet services at the current time, and even
though the FCC recently issued a report to Congress finding no immediate need to
impose such regulation, this situation may change as cable systems expand their
broadband delivery of Internet services. In particular, proposals have been
advanced in Congress and at the FCC that would require cable operators to
provide access to unaffiliated Internet service providers and online service
providers. Certain Internet service providers have attempted, unsuccessfully, to
use existing commercial leased access provisions to gain access to cable system
delivery. Finally, some LFAs have imposed mandatory Internet access requirements
as part of cable franchise renewals or transfer approvals. LFA authority to
impose such requirements was upheld by a U.S District Court in Portland, Oregon
and is now on appeal before the Ninth Circuit. Numerous LFAs are considering
imposing similar mandatory access requirements either during the renewal or
transfer processes or pursuant to their general franchise authority. Mandatory
access conditions, similar to those described above, could be imposed on the
Company by LFAs or through future regulatory, judicial or legislative
developments and could have adverse affects on the Company's operations.

Copyright. Cable television systems are subject to federal copyright licensing
covering carriage of television and radio broadcast signals. In exchange for
filing certain reports and contributing a percentage of their revenues to a
federal copyright royalty pool (which varies depending on the size of the system
and the number of distant broadcast television signals carried), cable operators
can obtain blanket permission to retransmit copyrighted material on broadcast
signals. The possible modification or elimination of this compulsory copyright
license is the subject of continuing legislative review and could adversely
affect the Company's ability to obtain desired broadcast programming. In
addition, the cable industry pays music licensing fees to BMI and is negotiating
a similar arrangement with ASCAP. Copyright clearances for nonbroadcast
programming services are arranged through private negotiations.

State and Local Regulation. Cable television systems generally are operated
pursuant to nonexclusive franchises granted by a municipality or other state or
local government entity in order to cross public rights-of-way. Federal law now
prohibits franchise authorities from granting exclusive franchises or from
unreasonably refusing to award additional franchises. Cable franchises generally
are granted for fixed terms and in many cases include monetary penalties for
non-compliance and may be terminable if the franchisee fails to comply with
material provisions.

The terms and conditions of franchises vary materially from jurisdiction to
jurisdiction. Each franchise generally contains provisions governing cable
operations, service rates, franchise fees, system construction and maintenance
obligations, system channel capacity, design and technical performance, customer
service standards, and indemnification protections. Although LFAs have
considerable discretion in establishing franchise terms, there are certain
federal limitations. For example, LFAs cannot insist on franchise fees exceeding
5% of the system's gross revenues, cannot dictate the particular technology used
by the system, and cannot specify video programming other than identifying broad
categories of programming.

Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal. Even if a franchise is
renewed, the franchise authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and services or
increased franchise fees as a condition of renewal. Similarly, if a franchise
authority's consent is required for the purchase or sale of a cable system or
franchise, such authority may attempt to impose more burdensome or onerous
franchise requirements in connection with a request for consent. Historically,
franchises have been renewed for cable operators that have provided satisfactory
services and have complied with the terms of their franchises. However, there
can be no assurance that renewal will be granted or that renewals will be made
on similar terms and conditions.

Various proposals have been introduced at the state and local levels with regard
to the regulation of cable television systems, and a number of states have
adopted legislation subjecting cable television systems to the jurisdiction of
state governmental agencies.

                                      -17-
<PAGE>   18

Tennessee and Florida, states where the Company operates Systems, have enacted
legislation with respect to the regulation of cable television systems. In
addition, a number of communities that the Company serves have adopted local
rate regulation and customer service ordinances.

INSURANCE:

The Company has insurance covering risks incurred in the ordinary course of
business, including general liability, property coverage and business
interruption insurance. As is typical in the cable television industry, the
Company does not maintain insurance covering its underground plant. Because of
the industry-wide casualty insurance reductions that resulted from insurers'
loss experience with several hurricanes in the southeastern portion of the
United States, the Company's casualty insurance in Florida and Louisiana was
ultimately reduced to $1 million per occurrence. All of the Company's casualty
insurance coverage is subject to deductibles ranging between $10,000 and
$100,000 per occurrence. The Company believes that its Systems in Florida and
Louisiana are located in areas that are not subject to a high degree of risk
from hurricanes, or from ice storms (which do pose a significant risk for its
Systems in other areas), and that losses in excess of its existing coverage
would be unlikely. If the Company is unable to maintain adequate casualty
insurance it will be subject to a potential reduction in cash flow in the event
of a loss in excess of its policy limits, and if a significant loss were to
occur, it could have a material adverse effect on the Company's financial
condition and results of operations. Notwithstanding the foregoing, the Company
believes that the amounts and types of its insurance coverage are commercially
reasonable given the nature and types of the Company's business and properties.

EMPLOYEES:

At December 31, 1999, the Company had approximately 161 full-time employees and
7 part-time employees. None of the Company's employees is represented by a labor
union. The Company considers its relations with its employees to be good.

ITEM 2. PROPERTIES

A cable television system consists of four principal operating components. The
first component, known as the headend, receives television, radio and
information signals by means of special antennas and satellite earth stations.
The second component, the distribution network, which originates at the headend
and extends throughout the system's service area, consists of microwave relays,
coaxial or fiber optic cables placed on utility poles or buried underground and
associated electronic equipment. The third component of the system is a "drop
cable," which extends from the distribution network into each customer's home
and connects the distribution system to the customer's television set. The
fourth component, a converter, is the home terminal device that expands channel
capacity to permit reception of more than twelve channels of programming.

The Company's principal physical assets consist of cable television systems,
including signal-receiving, encoding and decoding apparatus, headends,
distribution systems and subscriber house drop equipment for each of its
Systems. The signal receiving apparatus typically includes a tower, antenna,
ancillary electronic equipment and earth stations for reception of satellite
signals. Headends, consisting of associated electronic equipment necessary for
the reception, amplification and modulation of signals, are located near the
receiving devices. The Company's distribution systems consist primarily of
coaxial cable and related electronic equipment. As the upgrades are completed,
the Systems will incorporate fiber optic cable. Subscriber equipment consists of
taps, house drops and converters. The Company owns its distribution systems,
various office fixtures, test equipment and certain service vehicles. The
physical components of the Systems require maintenance and periodic upgrading to
keep pace with technological advances.

The Company's cables generally are attached to utility poles under pole rental
agreements with local public utilities, although in some areas the distribution
cable is buried in underground ducts or trenches. The FCC regulates most pole
attachment rates under the federal Pole Attachment Act.

The Company owns or leases parcels of real property for signal reception sites
(antenna towers and headends), microwave complexes and business offices. The
Company believes that its properties, both owned and leased, are in good
condition and are suitable and adequate for the Company's business operations as
presently conducted.

ITEM 3.  LEGAL PROCEEDINGS

The Company is a party to ordinary and routine litigation proceedings that are
incidental to the Company's business. Management believes that the outcome of
all pending legal proceedings will not, in the aggregate, have a material
adverse effect on the financial condition or results of operations of the
Company.

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

Effective December 29, 1999, with the approval of James' Partnership Advisory
Board and more than 96% of its limited partners, the limited partnership
agreement of James was amended and restated in its entirety. The James Cable
Partners, L.P. Second Amended and Restated Agreement of Limited Partnership
dated as of December 29, 1999 (the "Partnership Agreement") is substantially
similar


                                      -18-
<PAGE>   19

to James' prior limited partnership agreement. The most significant changes
effected by such amendment and restatement include the creation of a second
class of limited partnership interests and a reduction, from 96% or 66%, as
applicable, to 51%, in the requisite percentage consent of limited partners
necessary to undertake certain actions.

In connection with the adoption of the Partnership Agreement, and with the
approval of James' Partnership Advisory Board and its limited partners, (i) the
incentive compensation payable by James to the general partner pursuant to the
1994 General Partner Incentive Compensation Agreement dated December 9, 1994 was
converted to a 2% Class A limited partnership interest and (ii) the general
partner was issued an option to acquire a Class B limited partnership interest
of not more than 3.125% and not less than 2.5%.

PART II

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

EQUITY INTERESTS:

Equity interests in James consist of a general partnership interest and limited
partnership interests. The general partnership interest represents 0.95% of
James' total partnership interest and the limited partnership interests
represent the balance of James' total partnership interest. James has been a
privately held entity since its formation in 1988 and no trading market exists
for either the general partnership interest or the limited partnership
interests. At December 31, 1999, there was one holder of the general partnership
interest and 17 holders of the limited partnership interests. See also "Part III
- Item 10. Directors and Executive Officers" and " - Item 12. Security Ownership
of Certain Beneficial Owners and Management." James has not made any
distributions of cash or property to any of its partners since the date of its
inception.

Equity interests in Finance Corp. consist of shares of its common stock, no par
value per share. Finance Corp. has been a privately held entity since its
formation and no trading market exists for such common stock. At December 31,
1999, 1,000 shares of common stock were issued and outstanding, all of which
were owned of record and beneficially by James. Finance Corp. has never paid or
declared a dividend.

ITEM 6.  SELECTED FINANCIAL DATA

         The following table sets forth certain historical financial data for
the Company for each of the years in the five-year period ended December 31,
1999. The financial data for the years ended December 31, 1995 to 1999 were
derived from the financial statements of the Company which have been audited by
Deloitte & Touche LLP, independent auditors. The financial statements of the
Company at December 31, 1998 and 1999 and for each of the years in the
three-year period ended December 31, 1999, together with the report of Deloitte
& Touche LLP thereon, appear elsewhere in this Form 10-K.



                                      -19-
<PAGE>   20



                             Selected Financial Data
                 (amounts in thousands, except subscriber data)

<TABLE>
<CAPTION>

                                                                              YEAR ENDED DECEMBER 31,
                                                     1995             1996             1997          1998 (15)        1999 (15)
                                                     ----             ----             ----          ---------        ---------
<S>                                                 <C>              <C>              <C>            <C>              <C>
STATEMENT OF OPERATIONS DATA:
Revenues                                            $33,305          $35,213          $35,778          $37,758          $37,372
System operating expenses (1)                        15,073           16,249           17,400           19,410           20,445
Non-system operating expenses (2)                     2,280            2,480            2,585            2,960            2,831
Depreciation and amortization                        12,214            9,272            7,930            7,561            8,013
                                                    ---------------------------------------------------------------------------
Operating income                                      3,738            7,212            7,863            7,827            6,083
Interest expense, net                                 9,659            8,852            9,470           11,026           11,020
General partner incentive payment                       ---              ---              ---              ---              540
Other expenses, net                                     141              254              233              112              109
                                                    ---------------------------------------------------------------------------
Loss before gains on sales and
   extraordinary items                               (6,062)          (1,894)          (1,840)          (3,311)          (5,586)
Gains on sales of cable
   systems                                              ---              ---              ---              ---           15,886
Extraordinary loss due to debt
   refinancing                                          548              ---            3,125              ---              ---
                                                    ---------------------------------------------------------------------------
Net (loss) income                                   ($6,610)         ($1,894)         ($4,965)         ($3,311)         $10,300
                                                    ===========================================================================
OTHER DATA:
EBITDA (3)                                          $15,952          $16,484          $15,793          $15,388          $14,096
System operating cash flow (4)                       18,232           18,964           18,378           18,348           16,927
Capital expenditures                                  2,405            3,942            7,596            9,171           11,767
EBITDA margin (5)                                      47.9%            46.8%            44.1%            40.8%            37.7%
Ratio of earnings to fixed
   charges (6)                                          ---              ---              ---              ---              1.9x

CASH FLOW DATA:
Cash provided by operating
   activities                                        $6,901           $9,066           $8,403           $5,133           $3,706
Cash (used in) provided by
   investing activities                              (2,405)          (3,942)          (7,596)         (16,971)           3,671
Cash (used in) provided by
   financing activities                              (3,844)          (6,079)           8,995            3,400           (3,500)
                                                    ---------------------------------------------------------------------------
Net increase (decrease) in cash                        $652            ($955)          $9,802          ($8,438)          $3,877
                                                    ===========================================================================
SUMMARY SUBSCRIBER DATA:
Homes passed (7)                                    128,908          129,291          129,291          138,040          129,600
Basic subscribers (8)                                80,190           78,449           78,197           84,755           71,864
Basic penetration (9)                                  62.2%            60.7%            60.5%            61.4%            55.5%
Premium subscriptions (10)                           28,900           25,652           24,076           26,413           23,001
Premium penetration (11)                               36.0%            32.7%            30.8%            31.2%            32.0%
Average monthly total revenues
   per subscriber (12)                               $34.56           $36.89           $38.10           $39.95           $41.56
System operating cash flow per
   subscriber (13)                                     $227             $238             $235             $233             $226
EBITDA per subscriber (14)                             $199             $207             $202             $195             $188

<CAPTION>

                                                                                   AT DECEMBER 31,
                                                      1995             1996             1997             1998             1999
                                                      ----             ----             ----             ----             ----
<S>                                                 <C>              <C>              <C>            <C>              <C>
BALANCE SHEET DATA:
Cash and cash equivalents                            $1,056             $101           $9,903           $1,465           $5,342
Total assets                                         39,727           32,844           43,912           44,367           51,799
Total debt                                           88,573           82,494          100,000          103,500          100,000
Partners' deficit                                   (54,452)         (56,346)         (65,711)         (69,022)         (58,183)
</TABLE>




                                      -20-
<PAGE>   21

NOTES TO SELECTED FINANCIAL DATA

(1)  System operating expenses exclude depreciation and amortization.
(2)  Non-system operating expenses consist primarily of management fees payable
     to the General Partner of the Company.
(3)  EBITDA represents operating income before depreciation and amortization.
     The Company has included EBITDA data (which are not a measure of financial
     performance under Generally Accepted Accounting Principles ("GAAP"))
     because it understands such data are used by certain investors to determine
     a company's historical ability to service its indebtedness. EBITDA should
     not be considered as an alternative to net income as an indicator of the
     Company's performance or as an alternative to cash flow as a measure of
     liquidity as determined in accordance with GAAP.
(4)  System operating cash flow represents revenues less system operating
     expenses. System operating cash flow should not be considered as an
     alternative to net income as an indicator of the Company's performance or
     as an alternative to cash flow as a measure of liquidity as determined in
     accordance with GAAP.
(5)  EBITDA margin represents EBITDA divided by revenues.
(6)  For purposes of calculating the ratio of earnings to fixed charges,
     earnings includes income or loss before extraordinary items plus interest
     expense (which includes amortization of debt issuance costs). Fixed charges
     consist of interest expense incurred (including amortization of debt
     issuance costs) and the estimated interest component of rent expense.
     Earnings were inadequate to cover fixed charges by $6.1 million, $1.9
     million, $1.8 million and $3.3 million for the years ended December 31,
     1995, 1996, 1997 and 1998, respectively.
(7)  Homes passed refers to estimates by the Company of the number of dwelling
     units in a particular community that can be connected to the distribution
     system without any further extension of principal transmission lines. Such
     estimates are based upon a variety of sources, including billing records,
     house counts, city directories and other local sources.
(8)  For purposes of all information presented herein, unless otherwise
     indicated, the number of basic subscribers for the Systems has been
     computed by adding the actual number of subscribers for all non-bulk
     accounts and the equivalent subscribers for all bulk accounts. The number
     of such equivalent subscribers has been calculated by dividing aggregate
     basic service revenues for bulk accounts by the full basic service rate for
     the community in which the account is located.
(9)  Basic subscribers as a percentage of homes passed.
(10) A customer may purchase more than one premium service, each of which is
     counted as a separate premium subscription.
(11) Premium subscriptions as a percentage of basic subscribers.
(12) The average of the monthly total revenues divided by the number of basic
     subscribers at the end of such month during the twelve-month periods ended
     December 31 for each year presented.
(13) System operating cash flow divided by the average number of basic
     subscribers for the period.
(14) EBITDA divided by the average number of basic subscribers for the period.
(15) The figures shown for 1998 reflect the Company's December 1998 purchase of
     its cable system serving Tazewell, Tennessee. The figures shown for 1999
     reflect the Company's March 1999 sales of its cable systems serving
     Wartburg, Tennessee and Forsyth and Monroe County, Georgia (See "- Sales of
     Cable Systems").

                                      -21-
<PAGE>   22
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The following discussion provides information regarding the Company's financial
condition and results of operations for each of the years ended December 31,
1997, 1998 and 1999. This discussion should be read in conjunction with the
consolidated financial statements of the Company, and the notes thereto, which
appear elsewhere herein.

OVERVIEW:

Revenues. The Company's revenues are primarily attributable to subscription fees
charged to subscribers to the Company's basic and premium cable television
programming services. Basic revenues consist of monthly subscription fees for
all services (other than premium programming and Internet service) as well as
monthly charges for customer equipment rental. Premium revenues consist of
monthly subscription fees for programming provided on a per-channel basis.
Internet revenues consist of monthly subscription fees, leased line fees and
cable modem installation charges. In addition, other revenues are derived from
installation and reconnection fees charged to subscribers to commence service,
late payment fees, franchise fees, advertising revenues and commissions related
to the sale of goods by home shopping services. At December 31, 1999, the
Company had 71,864 basic subscribers and 23,001 premium subscriptions,
representing basic penetration of 55.5% and premium penetration of 32.0%. The
table below sets forth, for the periods indicated, the percentage of the
Company's total revenues attributable to the various sources:

<TABLE>
<CAPTION>

                                     YEAR ENDED DECEMBER 31,
                              1997             1998            1999
                              ----             ----            ----
           <S>                <C>              <C>             <C>
           Basic                83.8 %           83.5 %          82.3 %
           Premium               9.2              8.7             7.9
           Internet              0.0              0.3             2.1
           HITS                  0.0              0.0             0.1
           Other                 7.0              7.5             7.6
                             ------------     ------------    ------------
                               100.0 %          100.0 %         100.0 %
                             ============     ============    ============
</TABLE>


System Operating Expenses. System operating expenses are comprised of variable
operating expenses and fixed selling, service and administrative expenses
directly attributable to the Systems. Variable operating expenses consist of
costs directly attributable to providing cable and Internet services to
customers and therefore generally vary directly with revenues. Variable
operating expenses include programming fees paid to suppliers of programming the
Company includes in its basic and premium cable television services, as well as
expenses related to copyright fees, franchise operating fees and bad debt
expenses. Satellite programming fees have historically increased at rates in
excess of inflation due in part to improvements in the quality of programming.
Selling, service and administrative expenses directly attributable to the
Systems include the salaries and wages of the field and office personnel, plant
operating expenses, office and administrative expenses and sales costs.

Non-System Operating Expenses. Non-system operating expenses consist primarily
of general overhead expenses which are not directly attributable to any one
System. These expenses include most legal, audit and tax fees, an incentive
bonus pool accrual for the General Managers of the Systems and amounts paid to
the General Partner for management expenses.

Significant Leverage. At December 31, 1999, the Company's indebtedness was
$100.0 million, its total assets were $51.8 million, and its partners' deficit
was $58.2 million. Due to the Company's high degree of leverage: (a) a
substantial portion of its cash flow from operations will be committed to the
payment of its interest expense and will not be available for other purposes;
(b) the Company's ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions or other purposes may be
limited; and (c) the Company is more highly leveraged than many cable television
companies and certain DBS and telephone companies, which may limit the Company's
flexibility in reacting to changes in its business.




                                  -22-
<PAGE>   23

RESULTS OF OPERATIONS:

The following table sets forth the percentage relationship that the various
items bear to revenues for the periods indicated:

<TABLE>
<CAPTION>


                                                      1997              1998              1999
                                                      ----              ----              ----
<S>                                                   <C>               <C>               <C>
Revenues                                               100.0 %           100.0 %           100.0 %
System operating expenses                               48.6              51.4              54.7
Non-system operating expenses                            7.2               7.9               7.6
Depreciation and amortization                           22.2              20.0              21.4
                                                   -----------       -----------       -----------
Operating income                                        22.0              20.7              16.3
Interest expense, net                                   26.5              29.2              29.5
General partner incentive payment                        0.0               0.0               1.4
Other expenses, net                                      0.7               0.3               0.3
                                                   -----------       -----------       -----------
Loss before gains on sales and
   extraordinary items                                  (5.2)             (8.8)            (14.9)
Gains on sales of cable
   systems                                               ---               ---              42.5
Extraordinary loss due to debt
   refinancing                                           8.7               ---               ---
                                                   -----------       -----------       -----------
Net (loss) income                                      (13.9)%            (8.8)%            27.6 %
                                                   ===========       ===========       ===========
EBITDA margin                                           44.1 %            40.8 %            37.7 %

</TABLE>

RESULTS OF OPERATIONS -- YEAR ENDED DECEMBER 31, 1999 VERSUS YEAR ENDED DECEMBER
31, 1998:

Revenues. Revenues decreased by $400,000, or 1.0%, from $37.8 million in 1998 to
$37.4 million in 1999. This decrease is primarily the result of a reduction in
the Company's basic and premium revenues of $1.1 million from 1998 to 1999 which
was partially offset by a $700,000 increase in its Internet revenues for the
same periods. The decrease in the Company's basic and premium revenues are a
result of both the sale of the Company's Tennessee (Wartburg) and Forysth and
Monroe County, Georgia cable systems (See "- Sales of Cable Systems") and the
decrease in the Company's subscriber base discussed below. Average basic
revenues per subscriber per month increased from $33.35 to $34.18, or 2.5%,
between 1998 and 1999 due to rate increases imposed by the Company in the fourth
quarters of each of those years.

Subscribers. At December 31, 1999 the Company had 71,864 subscribers which
represents a decrease of 12,891 from the 84,755 subscribers at December 31,
1998. This decrease is primarily the result of sale of the Company's Tennessee
(Wartburg) and Forsyth and Monroe County, Georgia cable systems (See "- Sales of
Cable Systems") which accounted for 11,259 of the December 31, 1998 subscribers.
These sales were partially offset by the purchase of approximately 900
subscribers in Lafayette, Alabama from the Company's franchised cable service
competitor in November of 1999. Without such sales and purchase, the Company's
subscriber base decreased by 2,528. The Company believes that this decrease is a
result of the increased availability and affordability of competitive video
services from satellite dishes and other alternatives to traditional hardline
cable service (See "Item 1. Business - Competition"). The Company continues to
respond to this competition with the introduction of advanced telecommunications
services and aggressive marketing campaigns.

System Operating Expenses. System operating expenses increased 5.3% from $19.4
million in 1998 to $20.4 million in 1999. This increase was primarily the result
of additional costs related to the launching of Internet services in many of the
Company's Systems during 1999, as well as increases in programming costs
associated with new channel offerings and increased rates charged by programming
suppliers. As a percentage of revenues, system operating expenses increased by
3.3% from 51.4% in 1998 to 54.7% in 1999.

Non-System Operating Expenses. Non-system operating expenses, which consist
primarily of amounts paid to the General Partner for management expenses,
decreased 4.3% from $3.0 million in 1998 to $2.8 million in 1999, primarily due
to decreases in legal and other professional fees.

EBITDA. As a result of the foregoing, EBITDA in 1999 was $14.1 million, a
decrease of 8.4% from EBITDA in 1998 of $15.4 million.

Depreciation and Amortization. Depreciation and amortization increased 6.0% from
$7.6 million in 1998 to $8.0 million in 1999, due to the capital expenditures
associated with the Company's ongoing selective upgrades.

                                      -23-

<PAGE>   24



Interest Expense, Net. Interest expense, net remained constant at $11.0 million
for 1998 and 1999. Interest expense decreases of $300,000 which resulted from
capitalization of interest costs associated with the Company's ongoing selective
upgrades were offset by a decrease in interest income of approximately $200,000
from 1998 to 1999.

Loss before Gains on Sales and Extraordinary Items. As a result of the foregoing
factors, the Company's loss before gains on sales and extraordinary items
increased $2.3 million from $3.3 million in 1998 to $5.6 million in 1999.

Net Income / Loss. As a result of the foregoing factors, and because of the
gains on the sales of the Tennessee (Wartburg) and Forsyth and Monroe County,
Georgia cable systems (See "- Sales of Cable Systems") of $15.9 million, the
Company experienced net income of $10.3 million in 1999 as compared to a net
loss of $3.3 million in 1998.

RESULTS OF OPERATIONS -- YEAR ENDED DECEMBER 31, 1998 VERSUS YEAR ENDED DECEMBER
31, 1997:

Revenues. Revenues in 1998 were $37.8 million, an improvement of $2.0 million,
or 5.5%, over revenues of $35.8 million in 1997. In 1998, basic revenues
increased by $1.5 million, or 5.1%, primarily due to increases in subscription
rates. Average basic revenues per subscriber per month increased from $31.92 to
$33.35, or 4.5%, between 1997 and 1998.

Subscribers. During 1998, the Company experienced an increase of 6,558
subscribers (from 78,197 at December 31, 1997 to 84,755 at December 31, 1998) as
a result of its acquisition of Fannon Cable TV, Inc. in December of 1998.
Without this acquisition, the Company's subscriber count was essentially
unchanged from 1997 to 1998. The Company believes that the growth of its
subscriber base has been offset by the increased availability and affordability
of competitive video services and generally reflects the cable industry's
experience as a whole with respect to increased competition from satellite
dishes and wireless cable services (See "Item 1. Business - Competition").

System Operating Expenses. System operating expenses increased 11.6% from $17.4
million in 1997 to $19.4 million in 1998. This increase was primarily due to
$900,000 of variable cost increases associated with higher programming fees
(which increased from $6.6 million in 1997 to $7.5 million in 1998). In
addition, selling, service and administrative expenses of the Systems increased
8.5%, from $9.3 million in 1997 to $10.1 million in 1998, due to increased fixed
costs (including approximately $360,000 of additional costs related to the
launching of Internet services in certain of the Company's Systems during 1998).

Non-System Operating Expenses. Non-system operating expenses, which consist
primarily of amounts paid to the General Partner for management expenses
increased 14.5% to $3.0 million in 1998 from $2.6 million in 1997, primarily due
to increases in legal and other professional fees.

EBITDA. As a result of the foregoing, EBITDA in 1998 was $15.4 million, a
decrease of 2.6% from EBITDA in 1997 of $15.8 million.

Depreciation and Amortization. Depreciation and amortization decreased 4.6% from
$7.9 million in 1997 to $7.6 million in 1998, primarily due to certain assets
becoming fully depreciated.

Interest Expense, Net. Interest expense, net increased $1.6 million, or 16.4%,
from $9.5 million in 1997 to $11.0 million in 1998. This increase is primarily
the result of a change in the Company's debt structure that occurred in 1997.
During 1997 the Company had an average debt balance of approximately $89 million
and an average interest rate of approximately 10.8%, both of which were affected
by the Company's refinancing which took place on August 15, 1997. During 1998,
the Company's average debt balance increased to $100 million with an average
interest rate of 10.75%. These changes in the debt structure resulted in an
increase in interest expense of approximately $1.7 million from 1997 to 1998.
This increase in interest expense was partially offset by an increase in
interest income of approximately $200,000 from 1997 to 1998.

Loss before Gains on Sales and Extraordinary Items. As a result of the foregoing
factors, the Company's loss before gains on sales and extraordinary items
increased $1.5 million from $1.8 million in 1997 to $3.3 million in 1998.

Net Loss. As a result of the foregoing factors, and because of the extraordinary
loss due to debt refinancing of $3.1 million in 1997, net loss decreased $1.7
million from $5.0 million in 1997 to $3.3 million in 1998.

LIQUIDITY AND CAPITAL RESOURCES:

General. Liquidity describes the ability to generate sufficient cash flows to
meet the cash requirements of continuing operations. Liquidity, in the context
of the Company's operations, is typically determined by the cash flows from
operating activities (e.g. initial installation charges and monthly service fees
paid by subscribers) and the cash flows used in investing activities (e.g.
spending associated with capital projects). The Company continuously monitors
available cash and cash equivalents in relation to projected cash needs to
maintain adequate balances for current payments while maximizing cash available
for investment opportunities.

                                      -24-

<PAGE>   25

Net cash from operating activities was $8.4 million, $5.1 million and $3.7
million for the years ended December 31, 1997, 1998 and 1999, respectively. Net
cash from investing activities was $3.7 million for the year ended December 31,
1999 as compared to net cash used in investing activities of $17.0 million for
the year ended December 31, 1998. This change in investing activities was
primarily due to the $7.8 million spent in acquiring Fannon Cable TV, Inc. in
1998 and the $16.7 million received from the sales of the Company's Tennessee
(Wartburg) and Forsyth and Monroe County, Georgia cable systems (See "- Sales of
Cable Systems") in 1999. In addition, the Company's capital expenditures
increased from $9.2 million in 1998 to $11.8 million in 1999 as a result of the
capital improvement projects which were in process during 1999. Cash flows used
in financing activities were $3.5 million for the year ended December 31, 1999
as compared to cash flows from financing activities of $3.4 million for the year
ended December 31, 1998. This change in financing activities is primarily
attributable to $3.5 million in borrowings associated with the acquisition of
Fannon Cable TV, Inc. in 1998 that were repaid in March of 1999 following the
System sales.

Total assets increased $7.4 million from $44.4 million at December 31, 1998 to
$51.8 million at December 31, 1999. This increase resulted from significant
changes in the Company's cash, net property and equipment, and net intangible
assets. Cash increased by $3.9 million primarily as a result of the proceeds
received on the sale of its Tennessee (Wartburg) and Forsyth and Monroe County,
Georgia cable systems (See "- Sales of Cable Systems"). Net property and
equipment increased by $5.9 million as a result of the Company's capital
improvement projects which were in process during 1999. Net intangible assets
decreased $1.7 million primarily as a result of the 1999 amortization expense.
The net property and equipment and the net intangible assets were not materially
affected by the System sales because the assets sold were fully or nearly fully
depreciated or amortized.

Total debt decreased from $103.5 million at December 31, 1998 to $100.0 million
at December 31, 1999. This $3.5 million decrease in debt was the direct result
of the Company's repayment of the borrowings associated with its acquisition of
Fannon Cable TV, Inc.

As of December 31, 1999, the Company had completed the upgrades of its cable
plant to 750 MHz in Durant and Calera, Oklahoma, serving approximately 4,400
subscribers; Hawkinsville and Cochran, Georgia, serving approximately 2,600
subscribers; Douglas, Torrington, Wheatland and Lingle, Wyoming, serving
approximately 5,500 subscribers; Roanoke and Wadley, Alabama, serving
approximately 2,300 subscribers; and Eatonton, Madison and Gray, Georgia,
serving approximately 3,900 subscribers. Also, the Company has completed its
projects in Westlake, Louisiana, serving approximately 6,600 subscribers, and
Decatur, Texas, serving approximately 1,100 subscribers, in which it
supplemented its 450 MHz cable plant with fiber to allow for the introduction of
advanced telecommunications services.

In addition, the Company is currently in the construction phase of its 750 MHz
upgrade to the cable plant for its Tennessee System which serves approximately
6,100 subscribers. Upon completion of the Tennessee upgrade, which is expected
to occur during 2001, and with the completed upgrades discussed above, the
Company will have the ability to provide advanced telecommunications services to
approximately 50% of its December 31, 1999 total subscriber base.

The Company is continually in the process of identifying other areas within its
Systems which can be upgraded to allow for the introduction of advanced
telecommunications services. However, the Company will only proceed with
upgrades which it believes are economically feasible after carefully weighing
the anticipated revenues against the costs of completing the upgrade.

The Notes. The Company has outstanding an aggregate principal amount of
$100,000,000 of its 10 3/4% Series B Senior Notes due 2004 (the "Notes"). The
Notes are general senior unsecured obligations of the Company that mature on
August 15, 2004 and rank equally in right of payment with all other existing and
future unsubordinated indebtedness of the Company and senior in right of payment
to any subordinated obligations of the Company. The Notes are effectively
subordinated in right of payment to all secured indebtedness of the Company.
Interest on the Notes accrues at the rate of 10 3/4% per annum and is payable
semi-annually in cash in arrears on February 15 and August 15, which commenced
on February 15, 1998, to holders of record on the immediately preceding February
1 and August 1. Interest on the Notes accrues from the most recent date to which
interest has been paid. Interest is computed on the basis of a 360-day year
comprised of twelve 30-day months.

There is no public market for the Notes. The Company has not and does not intend
to list the Notes on any securities exchange or to seek approval for quotation
through any automated quotation system.

The Credit Facility. The Company has a Credit Facility with two independent
banks acting as the lenders. The Credit Facility is a $20 million revolving
credit facility (with an option to increase the amount of credit available
thereunder to $30 million). The Credit Facility matures on August 15, 2002.
Proceeds under the Credit Facility will be available (i) to provide for working
capital and general corporate purposes, (ii) to fund certain permitted
acquisitions of cable television systems, (iii) to provide for certain permitted
repurchases of up to $5 million in the aggregate of limited partnership
interests in the Company, and (iv) to pay transaction fees and expenses. The
Credit Facility requires the Company to maintain the ratio of its total debt to
annualized six-month EBITDA at no more than 7.50 to 1. As of December 31, 1999,
this covenant limited the Company's maximum borrowings thereunder to
approximately $2 million. The Credit Facility requires payments of accrued
interest on a monthly basis throughout the term, with principal payment due at
maturity.

                                      -25-

<PAGE>   26


The Credit Facility is secured by a first priority lien on and security interest
in substantially all of the assets of the Company. The Credit Facility contains
certain covenants and provides for certain events of default customarily
contained in facilities of a similar type. The financial covenants which the
Company considers most significant require it to: (a) maintain an interest
coverage ratio (that is, the ratio of annualized six-month EBITDA to interest
expense) of at least 1.1 to 1; (b) maintain a senior debt ratio (that is, the
ratio of debt under the Credit Facility to annualized six-month EBITDA) of no
more than 1.75 to 1; and (c) maintain the total debt ratio described above. In
addition, the second amendment to the Credit Facility, which is dated December
31, 1999 (See "Part IV - Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K - Exhibit (4)(g)"), added certain restrictions to the amount
of capital expenditures that the Company can make for the remainder of the
Credit Facility term. The Company is in compliance with each of these covenants.

The Company believes that it will continue to generate cash or obtain financing
sufficient to meet its requirements for debt service, working capital and
capital expenditures contemplated in the near term and through the maturity date
of the Notes. However, the ability of the Company to satisfy its obligations
will be primarily dependent on its future financial and operating performance
and upon its ability to renew or refinance borrowings or to raise additional
equity capital if necessary.

IMPACT OF INFLATION AND CHANGING PRICES:

The Company's costs and expenses are subject to inflation and price
fluctuations. However, because changes in costs are generally passed through to
subscribers, such changes historically have not had, and in the future are not
expected to have, a material effect on the Company's results of operations.

YEAR 2000 COMPLIANCE:

The Year 2000 issue had the potential of impacting the Company in three
different areas: (1) The technical aspects of the Company's business, (2) the
Company's accounting and billing and (3) programming reception. However, the
Company did not experience any significant malfunctions or errors in its
operating or business systems when the date changed from 1999 to 2000. Moreover,
based on its operations since January 1, 2000, the Company does not expect any
significant impact on its continuing business as a result of the "Year 2000
issues."

It is possible that the full impact of the date change, which was of concern due
to computer programs that use two digits instead of four digits to define years,
has not been fully recognized. For example, it is possible that Year 2000 or
similar issues, such as leap-year related problems, may occur at monthly,
quarterly or yearly intervals. The Company believes, though, that any such
problems are likely to be minor and correctable. In addition, the Company could
still be negatively impacted if its customers or suppliers are adversely
affected by the Year 2000 or similar issues. The Company currently is not aware
of any significant Year 2000 or similar problems that have arisen for its
customers and suppliers.

Due in part to the Company's historical reliance on third party vendors in the
areas of concern, the costs incurred by the Company in connection with its Year
2000 readiness efforts were immaterial to the Company's operations.

EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS:

In June 1998, Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," was issued. SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. The standard is effective for the first quarter
of the Company's fiscal year beginning January 1, 2001. The Company does not
anticipate that the adoption of SFAS No. 133 will have a material impact on its
financial position or results of operations.

SALES OF CABLE SYSTEMS:

Sale of the Tennessee (Wartburg) Cluster. On March 5, 1999, pursuant to an Asset
Purchase Agreement dated as of July 31, 1998, the Company sold its cable
television systems in Pickett County, Scott County, Morgan County, Roane County,
Fentress County and Cumberland County, Tennessee, all of which made-up the
Tennessee (Wartburg) System, to Rapid Communications Partners, L.P. for $14.7
million in cash. As a result of the sale, the Company's remaining operations in
Tennessee consist only of its Tazewell, Tennessee System.

Sale of the Forsyth System. On March 31, 1999, pursuant to an Asset Purchase
Agreement dated as of February 2, 1999, the Company sold its cable television
system, serving approximately 1,700 subscribers, in Forsyth and Monroe County,
Georgia to the City of Forsyth for $2.3 million in cash.


                                      -26-

<PAGE>   27

The net gains on the above sales are calculated as follows:


<TABLE>
<CAPTION>

                                           Tennessee          Forsyth            Totals
                                           ---------          -------            ------
<S>                                        <C>                <C>               <C>
Net sale proceeds                          $14,453,000        $2,292,000        $16,745,000
Basis of assets sold                           570,876           288,439            859,315
                                    --------------------------------------------------------
Gain on sale                               $13,882,124        $2,003,561        $15,885,685
                                    ========================================================
</TABLE>




FORWARD-LOOKING STATEMENTS:

From time to time, we may publish forward-looking statements relating to such
matters as anticipated financial performance, business prospects, new products,
and similar matters. These forward-looking statements are subject to risks and
uncertainties.

When we use any of the words "intends", "believes," "expects," "anticipates" or
similar expressions, we are making forward-looking statements. For such
statements we claim the protection of the Private Securities Litigation Reform
Act of 1995 which provides a safe harbor for forward-looking statements.

A variety of factors could cause our actual results and experiences to differ
materially from the anticipated results or other expectations expressed in our
forward-looking statements. Although we believe that our forward-looking
statements are reasonable, you should not place undue reliance on any of these
statements, which speak only as of the date made. You should understand that the
following important factors could cause our results or performance to differ
materially from those expressed in our forward-looking statements.

We could lose subscribers to new technologies. Since 1995, we have experienced
increased competition from new technologies such as wireless cable services and
DBS services. Due to regulatory changes, we also face potential competition from
telephone companies. Many of our competitors have significantly greater
financial resources than us. Not withstanding the various Systems that we have
purchased and sold, our total subscribers have decreased by approximately 5.4%
between December 31, 1996 and December 31, 1999. The Company believes that one
of the primary reasons for this loss in its subscriber base is the increased
availability, affordability and increased marketing efforts of competitive video
services from satellite dishes and other alternatives to traditional hardline
cable service. Specifically, DBS has recently emerged as a significant
competitor with the Company due to several factors including (i) a much heavier
emphasis on marketing campaigns, (ii) a significant reduction in the cost of the
equipment necessary for a customer to receive the DBS service and (iii) recent
legislation that allows certain DBS customers to receive local broadcast
programming (See "Part 1. Business - Competition"). While we believe our
strategy of upgrading certain Systems to provide enhanced video programming,
Internet access, telephony and other advanced telecommunications services will
allow the Company to remain competitive in most of its markets, there can be no
assurance that this will be the case.

Our new lines of business involve additional risk. While we do not have
extensive experience providing Internet access and other advanced
telecommunications services, at December 31, 1999 we had successfully launched
commercial Internet service in a certain portion of every Cluster.

         Some of the uncertainties associated with our offering Internet access
through cable are:

         -   customer acceptance of cable as an alternative to traditional
             dial-up Internet access;

         -   the competitive response of traditional ISPs, online services (such
             as The Microsoft Network, CompuServe and America Online) and long
             distance inter-exchange carriers (such as AT&T Corp., MCI
             Communications Corporation and Sprint Corporation), all of which
             currently offer Internet access on a large scale; and

         -   the possibility that new technologies may be developed which offer
             improved performance or other desirable features.

While we are optimistic about the prospects for these new lines of business,
there can be no assurance that we will be successful or that additional cash
flow will be generated.

Our business is extensively regulated. The cable television industry is subject
to extensive governmental regulation, principally by the FCC and local
franchising authorities. Many aspects of such regulation have recently been
extensively revised and are currently the subject of judicial proceedings and
administrative rulemakings, which are potentially significant to us. Moreover,
the regulation of cable television systems, including the rates charged for
cable services, remains a matter of interest to Congress, the FCC and local

                                      -27-


<PAGE>   28





regulatory officials. These regulations, which have removed some barriers to
competition and added materially to the regulatory burdens of cable operators,
related to:

         -   cable system rates for both basic and certain nonbasic services;

         -   programming access and exclusivity arrangements;

         -   access to cable channels by unaffiliated programming services;

         -   leased access terms and conditions;

         -   horizontal and vertical ownership of cable systems;

         -   customer service requirements;

         -   franchise renewals;

         -   television broadcast signal carriage and retransmission consent;

         -   technical standards;

         -   customer privacy;

         -   consumer protection issues;

         -   cable equipment compatibility;

         -   obscene or indecent programming; and

         -   requiring subscribers to subscribe to tiers of service other than
             basic service as a condition of purchasing premium services.

Under the FCC's rate regulations, most cable systems were required to reduce
their basic service and CPST rates in 1993 and 1994, and have since had their
rate increases governed by a complicated price cap scheme. However, operators
also have the opportunity of bypassing this "benchmark" regulatory scheme in
favor of traditional "cost of service" in cases where the latter methodology
appears favorable.

Because we qualify as a small cable company under FCC rules and have elected to
rely on the cost-of-service rules as and when our Systems are required to
justify their rates for regulated services, we have not implemented the rate
reductions that would otherwise have been required if we were subject to the
FCC's benchmarks. Instead, we were allowed to establish permitted rates under a
simple formula that considers total operating expenses (including amortization
expenses), net rate base, rate of return, channel count and subscribers. So long
as the per channel rate resulting from these inputs for one of our Systems is no
more than $1.24, that System's rates will be presumed reasonable. If the
formula-generated rate exceeds the $1.24, then we will be required to prove the
reasonableness of our calculations. Substantially all of our rates are under the
$1.24 per channel level. We believe that all of our rates in excess of the $1.24
per channel level are reasonable using the formula described above.

FCC rules permit local franchise authorities to review basic service rates, and
under certain circumstances, challenge CPST rates at the FCC. An adverse ruling
in any such proceeding could require us to reduce our rates and pay refunds. A
reduction in our rates or the payment of refunds could have a material adverse
effect on us. Once the maximum permitted rate allowed by FCC rules is being
charged by us in regulated communities, 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. Although the regulation of the CPST expired for all cable systems on
March 31, 1999, critics of the cable television industry have called for the
reinstatement of this regulation and further have urged more rigorous rate
regulation (including limits on programming cost pass-throughs to cable
subscribers) until a greater degree of competition to incumbent cable operators
has developed.

Our franchises are non-exclusive and are subject to renewal. We operate our
Systems under franchises granted by local authorities which are subject to
renewal and renegotiation from time to time. Each franchise is generally granted
for a fixed term ranging from five to 15 years but may be terminated if the
franchisee fails to comply with the material provisions thereof. Our franchises
typically impose conditions relating to the use and operation of the cable
television system, including requirements relating to the payment of fees,
system bandwidth capacity, customer service requirements, franchise renewal and
termination. As of December 31, 1999, we

                                      -28-

<PAGE>   29
had 8 franchises (representing 3.9% of our basic subscribers) expiring prior to
2002 and 35 franchises (representing 25.6% of our basic subscribers) expiring
between 2002 and 2006.

Although we believe that we generally have good relationships with our
franchising authorities, no assurance can be given that we will be able to
retain or renew such franchises or that the terms of any such renewals will be
on terms as favorable to us as our existing franchises. The non-renewal or
termination of franchises relating to a significant portion of our subscribers
could have a material adverse effect on our results of operations.

We must successfully integrate our future acquisitions. An element of our
business strategy is to achieve operational efficiencies by providing advanced
telecommunications services and video services over an expanded subscriber base
within a concentrated geographic area. Consequently, we intend to consider
potential opportunities to acquire or trade cable television systems. Any
acquisition or trade could have an adverse effect upon our results of operations
or cash flow, particularly acquisitions of new systems which must be integrated
with our existing operations. There can be no assurance that we will be able to
integrate successfully any acquired systems with our existing operations or
realize any efficiencies from any acquisition or trade. There can also be no
assurance that any acquisition or trade, if consummated, will improve operating
results or that we will be able to obtain the financing that may be necessary to
fund any acquisition or trade in the future. In addition, any acquisition or
trade will be subject to, among other things, the satisfaction of customary
closing conditions and the receipt of certain third-party or governmental
approvals, including the consent of franchising authorities.

Our insurance coverage has been reduced in Florida and Louisiana. Because of
industry-wide casualty insurance reductions that resulted from insurers' loss
experience with several hurricanes in the southeastern portion of the United
States, our casualty insurance in Florida and Louisiana has been reduced to $1
million per occurrence. We believe that our Systems in Florida and Louisiana are
located in areas that are not subject to a high degree of risk from hurricanes,
or from ice storms (which do pose a significant risk for our Systems in other
areas), and that losses in excess of our existing coverage would be unlikely.
However, if such casualty insurance is inadequate, we could experience a
potential reduction in cash flow in the event of a loss in excess of our policy
limits. If a significant loss were to occur, it could have a material adverse
effect on our financial condition and results of operations.

Our operations are dependent upon the services of management. We rely
significantly on the services of the General Partner and the personnel employed
by or on behalf of the General Partner. We maintain $5 million of key-man life
insurance on Mr. William R. James, who effectively controls the General Partner.
We could be adversely affected, however, if Mr. James or any of Messrs. Trenary,
Shoemaker and Madison were unwilling or unable to continue to make their
services available to us.

There are potential conflicts of interest. The General Partner, which is
controlled by William R. James, is the sole general partner of the Company. With
certain limitations, the General Partner has exclusive authority for the
management and control of our business and operations. It performs management
services for us, for which it is paid an annual fee.

We are subject to possible conflicts of interest arising out of our relationship
with the General Partner and Mr. James. Because we were organized and are
operated by the General Partner, these conflicts will not necessarily be
resolved through arm's-length negotiations but rather may be resolved through
the exercise of the General Partner's judgment consistent with its fiduciary
responsibilities to us and our limited partners. Our Partnership Agreement
provides for a Partnership Advisory Board, one of the functions of which is to
review any potential conflicts of interest involving the General Partner, and
provides that the General Partner may be removed by the limited partners but (so
long as the General Partner is controlled by Mr. James) only if the General
Partner has been found by an independent party to have been engaged in
malfeasance, criminal conduct, wanton, willful neglect or a material breach of
the Partnership Agreement. There are no other procedures for resolving conflicts
between us and the General Partner. The Indenture contains certain restrictions
on transactions between James and Finance Corp. and their subsidiaries and
affiliates.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

No disclosures are required with respect to this item because the Company did
not hold, either during the years ended December 31, 1999 and 1998, or at
December 31, 1999 or 1998, any market risk sensitive instruments.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Pages FS-1 through FS-16 which are included in Item 14. Exhibits, Financial
Statement Schedules, and Reports on Form 8-K of this Annual Report on Form 10-K
for the fiscal year ended December 31, 1999.

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

None.

                                     -29-



<PAGE>   30

PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS

Since its inception in 1988, the Company's business and affairs have been
managed and controlled by the General Partner. The General Partner is managed
and controlled by its three partners, Jamesco Inc., a Michigan corporation (of
which William R. James is the sole shareholder, sole executive officer and sole
director), Trenary Corp., Ltd., a Michigan corporation (of which C. Timothy
Trenary is the sole shareholder, sole executive officer and sole director), and
DKS Holdings, Inc., a Michigan corporation (of which Daniel K. Shoemaker is the
sole shareholder, sole executive officer and sole director). By virtue of these
arrangements, Messrs. James, Trenary and Shoemaker (each a "Director") perform
functions for the Company which are similar to those generally performed for a
corporation by its board of directors. The Directors also constitute all of the
directors of Finance Corp. Through the General Partner, the persons named below
(collectively, the "Executive Officers") perform for the Company functions
similar to those generally performed for a corporation by executive officers
having the titles set forth below:


<TABLE>
<CAPTION>

                         NAME                                 AGE    FUNCTIONS PERFORMED
                      ----------                              ---    -------------------
                 <S>                                          <C>    <C>
                 William R. James........................       66   President and
                                                                     Chief Executive Officer
                 C. Timothy Trenary......................       43   Chief Operating Officer
                 Daniel K. Shoemaker.....................       37   Chief Financial Officer
                 Scott A. Madison........................       42   Director of Engineering

</TABLE>


Messrs. James, Trenary and Shoemaker also constitute all of the executive
officers and directors of Finance Corp.

William R. James has been the sole shareholder and sole director of Jamesco, and
Jamesco has been a partner in the General Partner, since the Company was formed
in 1988. He has performed the functions of President and Chief Executive Officer
for the Company throughout the same period. He has been the President of Finance
Corp. since its formation in 1997.

In January 1986, Mr. James founded James Communications, Inc. ("JCI"), a cable
television company. He served as President and Chief Executive Officer of JCI
from its inception until it was sold in December 1987. From 1979 to 1986, Mr.
James was employed by Capital Cities Communications (which became Capital
Cities/ABC Inc.), during which time he oversaw the development of its cable
division ("Capital Cities Cable"). At the time he left Capital Cities
Communications to found JCI, Mr. James was an Executive Vice President of
Capital Cities Communications and the President of Capital Cities Cable. Prior
to joining Capital Cities Communications, Mr. James was a partner at Touche Ross
& Co. in charge of national manufacturing consulting. Mr. James is a graduate of
Princeton University and graduated from the Harvard University Business School
with distinction.

C. Timothy Trenary was a partner in the General Partner from the formation of
the Company until July 1, 1997, when he contributed his partnership interest to
his wholly-owned corporation, Trenary Corp., Ltd. From 1988 to 1989, Mr. Trenary
performed the functions of Chief Financial Officer for the Company, and, since
1989, he has performed the functions of its Chief Operating Officer. He has also
been a Vice President of Finance Corp. since its formation in 1997. Mr. Trenary
was Vice President of Finance of JCI during 1987. From 1983 to 1986, he was
Operations Manager of the Northern Region of Capital Cities Cable, and from 1981
to 1983, he was Manager of Financial Controls for Capital Cities Cable. Prior to
joining Capital Cities Cable, Mr. Trenary was an auditor with Arthur Young & Co.

Daniel K. Shoemaker was a partner in the General Partner from 1989 until July 1,
1997, when he contributed his partnership interest to his wholly-owned
corporation, DKS Holdings, Inc. He has performed the functions of Chief
Financial Officer for the Company since 1993, and from 1988 to 1993, he served
as its Director of Management Information Systems. He has also been the
Treasurer and Secretary of Finance Corp. since its formation in 1997. From 1985
to 1988, Mr. Shoemaker was a systems engineer in a management consulting group
of Electronic Data Systems Corporation.

Scott A. Madison has served as the Company's Director of Engineering since 1991.
From 1988 to 1991 he was Director of Engineering for C4 Media Companies (cable
television operators), and from 1986 to 1988 he was a Regional Engineer for C4
Media Cable South, L.P.I.

ITEM 11.   EXECUTIVE COMPENSATION

The Company does not pay any compensation to the Directors or Executive
Officers. The Partnership Agreement provides compensation to the General Partner
for management services. Under the terms of the Partnership Agreement, the
General Partner is entitled to an annual management fee equal to 4% of the
Company's annual revenues, plus $5 multiplied by the average aggregate number of
subscribers to the Systems owned by the Company during such year. The amount of
the management fee was

                                      -30-

<PAGE>   31


approximately $1,822,000, $1,905,000 and $1,868,000 in 1997, 1998 and 1999,
respectively. No other amounts were paid to the General Partner by the Company
in those years.

Effective December 29, 1999, with the consent of James' Partnership Advisory
Board and more than 96% of the limited partners of James, the limited
partnership agreement was amended and restated in its entirety. In connection
with the adoption of the Partnership Agreement, and with the approval of James'
Partnership Advisory Board and its limited partners, (i) the incentive
compensation payable by James to the general partner pursuant to the 1994
General Partner Incentive Compensation Agreement dated December 29, 1994 was
converted to a 2% Class A limited partnership interest, and (ii) the general
partner was issued an option to acquire a Class B limited partnership interest
of not more than 3.125% and not less than 2.5%.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

James is the record and beneficial owner of all of the issued and outstanding
shares of Finance Corp. The following table sets forth, at December 31, 1999,
the partnership interests in James beneficially owned by: (a) each person known
to James to beneficially own 5% or more of James' total partnership interests;
and (b) each Director, each Executive Officer, and all Directors and Executive
Officers as a group:

<TABLE>
<CAPTION>

                         NAME AND ADDRESS OF
                          BENEFICIAL OWNER                                     TYPE OF INTEREST(1)     % OF CLASS
         ------------------------------------------------------                -------------------     ----------

         <S>                                                                   <C>                     <C>
         William R. James(2)...............................................    General partnership            *
         710 North Woodward Avenue, Suite 180                                  Limited partnership           2.9%
         Bloomfield Hills, Michigan 48304
         C. Timothy Trenary(3).............................................    General partnership            *
         710 North Woodward Avenue, Suite 180                                  Limited partnership            *
         Bloomfield Hills, Michigan 48304
         Daniel K. Shoemaker(4)............................................    General partnership            *
         710 North Woodward Avenue, Suite 180                                  Limited partnership            *
         Bloomfield Hills, Michigan 48304
         Scott A. Madison..................................................    None
         710 North Woodward Avenue, Suite 180
         Bloomfield Hills, Michigan 48304
         SCP Acquisition LLC...............................................    Limited partnership          88.1%
         767 Fifth Avenue, 45th Floor
         New York, New York  10153
         All Directors and Executive Officers as a group...................    General partnership            *
                                                                               Limited partnership           3.2%

</TABLE>

----------
 *    Less than 1.00%.
(1)   The general partnership interest represents 0.95% of the Company's total
      partnership interest.
(2)   Reflects ownership of all of the capital stock of
      Jamesco Inc., which holds a 91.5% interest in the General
      Partner. Mr. James performs the functions of a Director of the Company. He
      also performs the functions of Chief Executive Officer of the Company.
(3)   Reflects ownership of all of the capital stock of Trenary Corp., Ltd.,
      which holds a 7.5% interest in the General Partner. Mr. Trenary performs
      the functions of a Director of the Company. He also performs the functions
      of Chief Operating Officer of the Company.
(4)   Reflects ownership of all of the capital stock of DKS Holdings, Inc.,
      which holds a 1.0% interest in the General Partner. Mr. Shoemaker performs
      the functions of a Director of the Company. He also performs the functions
      of Chief Financial Officer of the Company.

    ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    None.


                                      -31-


<PAGE>   32



    PART IV

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

    EXHIBITS:


<TABLE>
<CAPTION>

    ITEM 601
    REGULATION S-K
    EXHIBIT REFERENCE
         NUMBER                         EXHIBIT DESCRIPTION
    -----------------                   -------------------

    <S>                                 <C>
    (2)(a)/(10)(a)                      Asset Purchase Agreement by and between Fannon Cable T.V., Inc., a
                                        Tennessee Corporation, and James Cable Partners, L.P., a Delaware Limited
                                        Partnership, dated as of June 24, 1998 (incorporated by reference to
                                        Exhibit 2.1 of the registrant's Form 8-K as filed with the Securities and
                                        Exchange Commission on December 22, 1998).

    (2)(b)/(10)(b)                      Asset Purchase Agreement by and between James Cable Partners, L.P., a
                                        Delaware Limited Partnership, and Rapid Communications Partners, L.P.,
                                        a Colorado Limited Partnership, dated as of July 31, 1998
                                        (incorporated by reference to Exhibit 2.1 of the registrant's Form 8-K
                                        as filed with the Securities and Exchange Commission on March 19,
                                        1999).

    (3)(a)/(10)(c)                      Second Amended and Restated Agreement of Limited Partnership of James Cable
                                        Partners, L.P. dated as of December 29, 1999.*

    (3)(b)                              Certificate of Limited Partnership of the Company (incorporated by
                                        reference to Exhibit 3.2 of the registrant's Registration Statement on
                                        Form S-4 as filed with the Securities and Exchange Commission on
                                        September 8, 1997 (registration no. 333-35183)).

    (3)(c)                              Articles of Incorporation of Finance Corp. (incorporated by reference to
                                        Exhibit 3.3 of the registrant's Registration Statement on Form S-4 as filed
                                        with the Securities and Exchange Commission on September 8, 1997
                                        (registration no. 333-35183)).

    (3)(d)                              Bylaws of Finance Corp. (incorporated by reference to Exhibit 3.4 of the
                                        registrant's Registration Statement on Form S-4 as filed with the Securities
                                        and Exchange Commission on September 8, 1997 (registration no. 333-35183)).

    (4)(a)                              Indenture dated as of August 15, 1997 among the Company, Finance
                                        Corp., and United States Trust Company of New York, as Trustee
                                        (including form of Notes) (incorporated by reference to Exhibit 4.1 of
                                        the registrant's Registration Statement on Form S-4 as filed with the
                                        Securities and Exchange Commission on September 8, 1997 (registration
                                        no. 333-35183)).

    (4)(b)                              Credit Agreement dated as of August 15, 1997 among the Company, the
                                        lenders party thereto, NBD Bank as documentation agent and Canadian
                                        Imperial Bank of Commerce as co-agent (incorporated by reference to
                                        Exhibit 4.3 of the registrant's Registration Statement on Form S-4 as
                                        filed with the Securities and Exchange Commission on September 8, 1997
                                        (registration no. 333-35183)).

    (4)(c)                              Company Security Agreement dated as of August 15, 1997 between the
                                        Company and NBD Bank as documentation agent (incorporated by reference
                                        to Exhibit 4.4 of the registrant's Registration Statement on Form S-4
                                        as filed with the Securities and Exchange Commission on September 8,
                                        1997 (registration no. 333-35183)).

    (4)(d)                              Guaranty Agreement dated as of August 15, 1997 by Finance Corp. in favor of
                                        the Lenders and Agents named therein (incorporated by reference to
                                        Exhibit 4.5 of the registrant's Registration Statement on Form S-4 as filed
                                        with the Securities and Exchange Commission on September 8, 1997
                                        (registration no. 333-35183)).

</TABLE>



                                      -32-

<PAGE>   33


<TABLE>
<CAPTION>

    ITEM 601
    REGULATION S-K
    EXHIBIT REFERENCE
         NUMBER                         EXHIBIT DESCRIPTION
    -----------------                   -------------------
    <S>                                 <C>
    (4)(e)                              Guarantor Security Agreement dated as of August 15, 1997 between
                                        Finance Corp. and NBD Bank as documentation agent (incorporated by
                                        reference to Exhibit 4.6 of the registrant's Registration Statement on
                                        Form S-4 as filed with the Securities and Exchange Commission on
                                        September 8, 1997 (registration no. 333-35183)).

    (4)(f)                              First Amendment to the Credit Agreement dated as of August 15, 1998
                                        among James Cable Partners, L.P., the lenders party thereto, NBD Bank,
                                        as documentation agent, and Canadian Imperial Bank of Commerce, as
                                        administrative agent (incorporated by reference to Exhibit 4.7 of the
                                        registrant's Form 10-Q as filed with the Securities and Exchange
                                        Commission for the quarterly period ended June 30, 1998).

    (4)(g)                              Second Amendment to the Credit Agreement dated as of December 31, 1999
                                        among James Cable Partners, L.P., the lenders party thereto, Bank One,
                                        Michigan (formerly known as NBD Bank), as documentation agent, and
                                        Canadian Imperial Bank of Commerce, as administrative agent.*

    (4)(h)                              Option Agreement / Option Certificate dated as of December 29, 1999 by and
                                        between James Cable Partners, L.P. and James Communications Partners.*

    12                                  Statement re computation of ratios.*

    21                                  List of subsidiaries of James: James Cable Finance Corp. (James Cable Finance
                                        Corp. has no subsidiaries.)

    24                                  Powers of Attorney.*

    27                                  Financial Data Schedule.*

</TABLE>

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

    *    Filed herewith.

Management contracts and compensatory plans or arrangements:

The management contracts and compensatory plans or arrangements required to be
filed as exhibits and included in such list of exhibits are as follows:


<TABLE>

    <S>              <C>
    (3)(a)/(10)(c)   Second Amended and Restated Agreement of Limited Partnership of James Cable Partners, L.P.
                     dated as of December 29, 1999.*

    (3)(b)           Certificate of Limited Partnership of the Company (incorporated by reference to
                     Exhibit 3.2 of the registrant's Registration Statement on Form S-4 as filed with
                     the Securities and Exchange Commission on September 8, 1997 (registration no.
                     333-35183)).

    (4)(h)           Option Agreement / Option Certificate dated as of December 29, 1999 by and between James Cable
                     Partners, L.P. and James Communications Partners.*

</TABLE>


REPORTS ON FORM 8-K:

None.


                                      -33-

<PAGE>   34

    INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES:

<TABLE>
<CAPTION>

                                                                                                     10-K
                                                                                                     Report
                                                                                                     page(s)
                                                                                                     -------
    <S>                                                                                              <C>
    James Cable Partners, L.P. and Subsidiary:
       Independent Auditors' Report.............................................................     FS-1
       Consolidated balance sheets as of December 31, 1998 and 1999.............................     FS-2
       Consolidated statements of operations for each of the years ended December 31, 1997,
       1998 and 1999............................................................................     FS-3
       Consolidated statements of partners' deficit for each of the years ended December 31,
       1997, 1998 and 1999......................................................................     FS-4
       Consolidated statements of cash flows for each of the years ended December 31, 1997,
       1998 and 1999............................................................................     FS-5
       Notes to consolidated financial statements...............................................     FS-6
    James Cable Finance Corp.:
       Independent Auditors' Report.............................................................     FS-14
       Balance sheets as of December 31, 1998 and 1999..........................................     FS-15
       Notes to balance sheets..................................................................     FS-16

</TABLE>

    Financial Statement Schedules:

          Any schedules for which provision is made in Regulation S-X either (i)
          are not required under the related instructions or are inapplicable
          and, therefore, have been omitted, or (ii) the information required is
          included in the consolidated financial statements or the notes thereto
          that are a part hereof.




                                      -34-



<PAGE>   35
INDEPENDENT AUDITORS' REPORT


To the Partners of
James Cable Partners, L.P.
Bloomfield Hills, Michigan

We have audited the accompanying consolidated balance sheets of James Cable
Partners, L.P. (a Delaware Limited Partnership) at December 31, 1998 and 1999,
and the related consolidated statements of operations, partners' deficit and
cash flows for each of the three years in the period ended December 31, 1999.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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, such consolidated financial statements present fairly, in all
material respects, the financial position of James Cable Partners, L.P. at
December 31, 1998 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles.



/s/ Deloitte & Touche LLP


February 4, 2000
Detroit, Michigan





                                      FS-1
<PAGE>   36

                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                    December 31,
                                                                                          ----------------------------------
                                                                                                1998              1999
                                                                                                -----             -----

                          ASSETS
<S>                                                                                       <C>               <C>
Cash and cash equivalents                                                                  $    1,465,193    $    5,342,420
Accounts receivable - Subscribers (net of allowance for doubtful
      accounts of $43,971 in 1998 and $28,141 in 1999)                                          3,419,506         3,356,444
Prepaid expenses and other assets (Note 5)                                                        140,426           180,635
Property and equipment: (Note 7)
      Cable television distribution systems and equipment                                      87,266,805        87,448,177
      Land and land improvements                                                                  306,426           296,681
      Buildings and improvements                                                                1,111,621           988,121
      Office furniture and fixtures                                                             1,720,616         2,169,720
      Vehicles                                                                                  3,556,304         3,592,938
                                                                                          ----------------  ----------------
           Total                                                                               93,961,772        94,495,637
      Less accumulated depreciation                                                           (76,026,758)      (70,686,387)
                                                                                          ----------------  ----------------
           Total                                                                               17,935,014        23,809,250
Deferred financing costs (net of accumulated amortization of $843,508
      in 1998 and $1,474,393 in 1999)                                                           3,367,654         2,736,769
Intangible assets, net (Notes 2 and 7)                                                         18,026,202        16,353,084
Deposits                                                                                           13,232            20,842
                                                                                          ----------------  ----------------
           Total assets                                                                    $   44,367,227    $   51,799,444
                                                                                          ================  ================

               LIABILITIES AND PARTNERS' DEFICIT
Liabilites:
      Debt (Note 3)                                                                        $  103,500,000    $  100,000,000
      Accounts payable                                                                            306,658           272,588
      Accrued expenses (Note 5)                                                                 2,416,467         2,584,667
      Accrued interest on 10-3/4% Senior Notes (Note 3)                                         4,031,249         4,031,249
      Unearned revenue                                                                          3,111,739         3,072,305
      Subscriber deposits                                                                          23,424            21,451
                                                                                          ----------------  ----------------
           Total                                                                              113,389,537       109,982,260
Commitments and contingencies (Notes 4 and 6)                                                   ---               ---
Partners' deficit:
      Limited Partners ("L.P.")                                                               (62,650,960)      (52,314,823)
      General Partner ("G.P.")                                                                 (6,371,350)       (5,867,993)
                                                                                          ----------------  ----------------
           Total                                                                              (69,022,310)      (58,182,816)
                                                                                          ----------------  ----------------
           Total liabilities and partners' deficit                                         $   44,367,227    $   51,799,444
                                                                                          ================  ================
</TABLE>

                 See notes to consolidated financial statements.


                                      FS-2

<PAGE>   37

                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                               ----------------------------------------------------
                                                                    1997              1998              1999
                                                                    ----              ----              ----
<S>                                                           <C>               <C>               <C>
Revenues                                                       $    35,777,675   $    37,757,809   $    37,371,831
System operating expenses (excluding
      depreciation and amortization)                                17,399,790        19,409,691        20,444,576

Non-system operating expenses:
      Management fee (Note 5)                                        1,822,417         1,904,984         1,868,165
      Other                                                            762,304         1,054,698           963,114
                                                               ----------------  ----------------  ----------------
           Total non-system operating expenses                       2,584,721         2,959,682         2,831,279

Depreciation and amortization                                        7,929,986         7,561,451         8,013,278
                                                               ----------------  ----------------  ----------------
           Operating income                                          7,863,178         7,826,985         6,082,698
Interest and other:
      Interest expense                                              (9,646,679)      (11,383,449)      (11,158,350)
      Interest income                                                  176,136           357,138           138,524
      General partner incentive payment (Note 9)                             0                 0          (540,000)
      Other (Note 3)                                                  (232,845)         (111,544)         (109,063)
                                                               ----------------  ----------------  ----------------
           Total interest and other                                 (9,703,388)      (11,137,855)      (11,668,889)
                                                               ----------------  ----------------  ----------------

Loss before gains on sales and extraordinary items                  (1,840,210)       (3,310,870)       (5,586,191)

Gains on sales of cable systems (Note 8)                                     0                 0        15,885,685

Extraordinary loss due to debt
      refinancing (Note 3)                                          (3,125,012)                0                 0
                                                               ----------------  ----------------  ----------------

           Net (loss) income                                   $    (4,965,222)  $    (3,310,870)  $    10,299,494
                                                               ================  ================  ================
</TABLE>

                 See notes to consolidated financial statements.

                                      FS-3

<PAGE>   38

                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT

<TABLE>
<CAPTION>
                                                                     Limited               General
                                                                     Partners              Partner                 Total
                                                                -------------------   -------------------    ------------------
<S>                                                            <C>                  <C>                    <C>
Balance, December 31, 1996                                      $      (50,587,123)  $        (5,759,095)   $      (56,346,218)
       Net loss                                                         (4,725,402)             (239,820)           (4,965,222)
       Repurchase of warrants                                           (4,187,480)             (212,520)           (4,400,000)
                                                                -------------------   -------------------    ------------------
Balance, December 31, 1997                                             (59,500,005)           (6,211,435)          (65,711,440)
       Net loss                                                         (3,150,955)             (159,915)           (3,310,870)
                                                                -------------------   -------------------    ------------------
Balance, December 31, 1998                                             (62,650,960)           (6,371,350)          (69,022,310)
       Net income                                                        9,796,137               503,357            10,299,494
       Capital contribution                                                540,000                     0               540,000
                                                                ===================   ===================    ==================
Balance, December 31, 1999                                      $      (52,314,823)  $        (5,867,993)   $      (58,182,816)
                                                                ===================   ===================    ==================
</TABLE>

                 See notes to consolidated financial statements.

                                      FS-4

<PAGE>   39

                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                                    ------------------------------------------
                                                                    1997              1998              1999
                                                                    ----              ----              ----

<S>                                                            <C>               <C>               <C>
Cash Flows from Operating Activities:
      Net (loss) income                                         $   (4,965,222)   $   (3,310,870)   $   10,299,494

      Adjustments to reconcile net (loss) income
           to net cash from operating activities:
           Depreciation                                              2,932,587         3,940,390         5,534,440
           Amortization                                              4,997,399         3,621,061         2,478,838
           Noncash interest expense                                    647,623           616,302           630,885
           Gains on sales of cable systems                                                             (15,885,685)
           Noncash incentive payment                                                                       540,000
           Extraordinary item, net of additional
                interest                                             1,894,451                 0                 0
           (Increase) decrease in assets:
                Accounts receivable                                    (37,271)          (75,161)           63,062
                Prepaid expenses                                         2,128            73,390           (40,209)
                Deposits                                                 4,255             2,550            (7,610)
           (Decrease) increase in liabilities:
                Accounts payable                                      (116,801)           60,823           (34,070)
                Accrued expenses                                    (1,095,548)           83,239           168,200
                Accrued interest on 10-3/4%
                   Senior Notes                                      4,031,249                 0                 0
                Unearned revenue                                       110,950           123,760           (39,434)
                Subscriber deposits                                     (2,394)           (1,855)           (1,973)
                                                                --------------    --------------    --------------
                   Total adjustments                                13,368,628         8,444,499        (6,593,556)
                                                                --------------    --------------    --------------
                   Net cash flows from
                      operating activities                           8,403,406         5,133,629         3,705,938

Cash Flows (used in) from Investing Activities:
      Purchase of Fannon Cable T.V., Inc.                                             (7,800,000)
      Purchase of Edge Cable T.V.                                                                         (750,974)
      Purchase of several Internet businesses                                                             (555,720)
      Net proceeds from sales of systems                                                                16,745,000
      Additions to property and equipment                           (7,595,978)       (9,171,278)      (11,767,017)
                                                                --------------    --------------    --------------
                Net cash flows (used in) from
                   investing activities                             (7,595,978)      (16,971,278)        3,671,289

Cash Flows from (used in) Financing Activities:
      Principal payments on debt                                   (82,407,796)                         (3,500,000)
      Proceeds from debt borrowings                                100,000,000         3,500,000
      Payments on capital lease obligation                             (86,441)
      Deferred financing costs                                      (4,111,162)         (100,000)
      Repurchase of warrants                                        (4,400,000)
                                                                --------------    --------------    --------------
                Net cash flows from (used in)
                   financing activities                              8,994,601         3,400,000        (3,500,000)
                                                                --------------    --------------    --------------
Net Increase (Decrease) in Cash and
      Cash Equivalents                                               9,802,029        (8,437,649)        3,877,227

Cash and Cash Equivalents, Beginning of Year                           100,813         9,902,842         1,465,193
                                                                --------------    --------------    --------------
Cash and Cash Equivalents, End of Year                          $    9,902,842    $    1,465,193    $    5,342,420
                                                                ==============    ==============    ==============
Supplemental Disclosure of Cash Flow Information
      - Cash paid for interest during the period
      (Net of amounts capitalized)                              $    5,651,010    $   10,750,000    $   10,839,835
                                                                ==============    ==============    ==============
</TABLE>


                 See notes to consolidated financial statements.

                                      FS-5


<PAGE>   40



                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      NATURE OF OPERATIONS - James Cable Partners, L.P. (a Delaware limited
      partnership) ("James") was formed on January 12, 1988. James has system
      locations in Alabama, Colorado, Wyoming, Oklahoma, Texas, Florida,
      Tennessee, Louisiana and Georgia. James' principal investment objective is
      to realize capital appreciation through the acquisition, ownership,
      control, and operations of cable television systems.

         James Cable Finance Corp., a Michigan corporation ("Finance Corp."),
      was organized on June 19, 1997 and became a wholly-owned subsidiary of
      James for the sole purpose of acting as co-issuer with James of the Notes
      referred to below (Note 3). References to the "Company" herein are to
      James and Finance Corp. consolidated, or to James prior to the
      organization of Finance Corp., as appropriate.

      PARTNERSHIP AGREEMENT - The following represents certain provisions of the
      James Cable Partners, L.P. Second Amended and Restated Agreement of
      Limited Partnership dated as of December 29, 1999 (the "Partnership
      Agreement"):

          Term of Agreement - Unless its term is extended as provided in the
      Partnership Agreement, James will be dissolved upon the earliest to occur
      of (i) December 31, 2005, (ii) a determination by the general partner that
      James should be dissolved, with the approval of 51% of the Class A Limited
      Partner interests, (iii) the sale or disposition by James of substantially
      all of its assets, (iv) the consent of holders of 51% of the Class A
      Limited Partner interests, (v) the removal of the general partner pursuant
      to the terms of the Partnership Agreement, or (vi) the bankruptcy,
      insolvency, dissolution or withdrawal of the general partner.

          Voting Rights - Except as to matters for which consent or approval is
      expressly required under the Partnership Agreement, the Limited Partners
      have no right to vote on any partnership matters. Where a vote or consent
      is required, each Partner is entitled to vote based on its percentage
      interest in James.

          Contributions - Under the Partnership Agreement, the partners have
      made certain contributions to James. The general partner is not required
      to lend or advance any funds to James or to make any additional capital
      contributions to James. No limited partner is required to lend any funds
      to James or to make any capital contributions to James. The Partnership
      Agreement provides that no partner of James shall have the right to
      withdraw or demand the return of its capital contribution during the term
      of James' existence. The general partner is not personally liable for the
      return of the capital contributions made by Limited Partners.

          Distributions - James has not made distributions to any of the
      partners, cash or property, from the date of inception to the current
      date. While James does not have plans to make any distributions in the
      near future, any distributions made would be subject to the provisions of
      both the Partnership Agreement and James' various debt agreements.


                                      FS-6

<PAGE>   41

      PROPERTY, PLANT AND EQUIPMENT are recorded at cost. For the year ended
      December 31, 1999, the Company capitalized interest of $295,223.
      Depreciation is computed using accelerated methods and includes amounts
      charged to expense under capital lease obligations. Estimated useful lives
      for major categories are as follows:

<TABLE>
<CAPTION>
                                                                         YEARS
<S>                                                                  <C>
      Buildings and improvements                                      31.5 and 39
      Cable television distribution systems                                7
      Office furniture and fixtures                                      5 - 7
      Vehicles                                                             5
</TABLE>


      INTANGIBLE ASSETS consist of subscriber lists, franchise operating rights
      and covenants not to compete acquired in connection with acquisitions.
      Also included is goodwill, which is the amount by which the cost of
      acquisitions exceeded the fair values assigned to assets acquired.
      Intangible assets are amortized using the straight-line method over
      periods up to 40 years.

      DEFERRED FINANCING COSTS in connection with the refinancing (Note 3) are
      being amortized on the straight-line method over 5 years for the credit
      facility and 7 years for the 10-3/4% Senior Notes due 2004.

      REVENUES are recognized in the period in which the related services are
      provided to the subscribers.

      PROFITS AND LOSSES are generally allocated in accordance with James'
      Partnership Agreement. Currently, profits and losses are allocated
      approximately 95% to the limited partners and 5% to the general partner.

      STATEMENT OF CASH FLOWS - For purposes of the statement of cash flows, the
      Company considers all highly liquid debt instruments purchased with
      maturities of ninety days or less at date of purchase to be cash
      equivalents.

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

      INCOME TAXES - The financial statements include only those assets,
      liabilities and results of operations of the Company which relate to the
      business of James Cable Partners, L.P. No recognition has been made of
      income taxes since these taxes are the personal responsibility of the
      partners.

      IMPACT OF RECENTLY ADOPTED ACCOUNTING PRINCIPLES - In June 1998, Statement
      of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
      Derivative Instruments and Hedging Activities" was issued. SFAS No. 133
      establishes accounting and reporting standards for derivative instruments,
      including certain derivative instruments embedded in other contracts, and
      for hedging activities. It requires that an entity recognize all
      derivatives as either assets or liabilities in the balance sheet and
      measure those instruments at fair value. The standard is effective for the
      first quarter of the Company's fiscal year beginning January 1, 2001. The


                                      FS-7

<PAGE>   42

      Company does not anticipate that adoption of SFAS No. 133 will have a
      material impact on its financial position or results of operations.

      FAIR VALUES OF FINANCIAL INSTRUMENTS - The carrying values of cash and
      cash equivalents, accounts receivable, accounts payable and the Credit
      Facility (Note 3) approximate fair market value due to the short-term of
      maturities of these instruments.

          The estimated fair value of the Company's Notes (Note 3) have been
      determined using available market information. However, considerable
      judgement is required in interpreting market data to develop the estimates
      of fair value. Accordingly, the estimates presented herein may not be
      indicative of the amounts that the Company could realize in a current
      market exchange. The use of different assumptions or valuation
      methodologies may have a material effect on the estimated fair value
      amounts. The fair value of the Notes was estimated using quoted market
      prices (in millions).

<TABLE>
<CAPTION>
                      December 31, 1998                December 31, 1999
                 -------------------------        --------------------------
                    Carrying        Fair             Carrying        Fair
                     Amount         Value             Amount         Value
                     ------         -----             ------         -----
<S>                 <C>            <C>               <C>            <C>
      The Notes      $100.0         $105.5             $100.0        $100.5

</TABLE>


2.    INTANGIBLE ASSETS

      Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                                           1998                   1999
<S>                                                                  <C>                 <C>
      Franchise operating rights                                       $ 60,292,548         $ 52,995,548
      Subscriber lists                                                   13,631,000           12,090,720
      Covenants not to compete                                           13,928,200           12,994,200
      Goodwill                                                           18,093,009           16,585,782
      Organization costs                                                  1,248,020            1,248,020
                                                                       ------------         ------------
                 Total                                                  107,192,777           95,914,270
      Less accumulated amortization                                     (89,166,575)         (79,561,186)
                                                                       ------------         ------------
      Total                                                            $ 18,026,202         $ 16,353,084
                                                                       ============         ============
</TABLE>


3.    DEBT

      Debt consists of the following:
<TABLE>
<CAPTION>
                                                                          1998                      1999
<S>                                                               <C>                     <C>
      10-3/4% Series B Senior Notes due 2004                       $     100,000,000       $       100,000,000
      Bank Credit Facility                                                 3,500,000                   ---
                                                                   -----------------       -------------------

Total                                                              $     103,500,000       $       100,000,000
                                                                   =================       ===================
</TABLE>


      THE NOTES - The Company has outstanding an aggregate principal amount of
      $100,000,000 of its 10 3/4% Series B Senior Notes due 2004 (the "Notes").
      The Notes are general senior unsecured obligations of the Company that
      mature on August 15, 2004 and rank equally in right of payment

                                      FS-8

<PAGE>   43

      with all other existing and future unsubordinated indebtedness of the
      Company and senior in right of payment to any subordinated obligations of
      the Company. The Notes are effectively subordinated in right of payment to
      all secured indebtedness of the Company. Interest on the Notes accrues at
      the rate of 10 3/4% per annum and is payable semi-annually in cash in
      arrears on February 15 and August 15, which commenced on February 15,
      1998, to holders of record on the immediately preceding February 1 and
      August 1. Interest on the Notes accrues from the most recent date to which
      interest has been paid. Interest is computed on the basis of a 360-day
      year comprised of twelve 30-day months.

      There is no public market for the Notes. The Company has not and does not
      intend to list the Notes on any securities exchange or to seek approval
      for quotation through any automated quotation system.

      THE CREDIT FACILITY - The Company has a Credit Facility with two
      independent banks acting as the lenders. The Credit Facility is a $20
      million revolving credit facility (with an option to increase the amount
      of credit available thereunder to $30 million). The Credit Facility
      matures on August 15, 2002. Proceeds under the Credit Facility will be
      available (i) to provide for working capital and general corporate
      purposes, (ii) to fund certain permitted acquisitions of cable television
      systems, (iii) to provide for certain permitted repurchases of up to $5
      million in the aggregate of limited partnership interests in the Company,
      and (iv) to pay transaction fees and expenses. The Credit Facility
      requires the Company to maintain the ratio of its total debt to annualized
      six-month EBITDA at no more than 7.50 to 1. As of December 31, 1999, this
      covenant limited the Company's maximum borrowings thereunder to
      approximately $2 million. The Credit Facility requires payments of accrued
      interest on a monthly basis throughout the term, with principal payment
      due at maturity. The interest rate of the Credit Facility is based on
      Prime or one to six month LIBOR rates plus a certain percentage based on
      provisions related to debt to earnings ratios and events of default, as
      defined. At December 31, 1999 the Company had no outstanding borrowings
      under the Credit Facility.

          The Credit Facility is secured by a first priority lien on and
      security interest in substantially all of the assets of the Company. The
      Credit Facility contains certain covenants and provides for certain events
      of default customarily contained in facilities of a similar type. The
      financial covenants which the Company considers most significant require
      it to: (a) maintain an interest coverage ratio (that is, the ratio of
      annualized six-month EBITDA to interest expense) of at least 1.1 to 1; (b)
      maintain a senior debt ratio (that is, the ratio of debt under the Credit
      Facility to annualized six-month EBITDA) of no more than 1.75 to 1; and
      (c) maintain the total debt ratio described above. In addition, the second
      amendment to the Credit Facility, which is dated December 31, 1999, added
      certain restrictions to the amount of capital expenditures that the
      Company can make for the remainder of the Credit Facility term. The
      Company is in compliance with each of these covenants.

      EXTRAORDINARY LOSS - In connection with the prepayment of the prior bank
      credit facility and the subordinated notes, the Company realized an
      extraordinary loss as follows:

                                      FS-9

<PAGE>   44

<TABLE>
             <S>                                                    <C>
              Write-off of deferred financing costs                        $1,894,451
              Additional interest                                          $1,230,561
                                                                     -----------------

              Total extraordinary loss                                     $3,125,012
                                                                     =================
</TABLE>



         In addition, the Company has paid administrative and other fees to the
      debtholders for maintenance and services related to the debt. Amounts paid
      in the years ended December 31, 1997, 1998 and 1999 were $234,446,
      $113,297 and $110,818, respectively.

4.    COMMITMENTS AND CONTINGENCIES

          The Company leases office space under operating leases which expire at
      varying dates through 2004. Total rental expense, including month-to-month
      rentals, was approximately $80,353, $90,897 and $113,556 for the years
      ended December 31, 1997, 1998 and 1999, respectively.

          The Company is committed to monthly pole rentals of $45,757 as of
      December 31, 1999, to various utilities and cities. These agreements are
      subject to termination rights by both parties.

          The Company is a party to ordinary and routine litigation proceedings
      that are incidental to the Company's business. Management believes that
      the outcome of all pending legal proceedings will not, in the aggregate,
      have a material adverse effect on the financial condition or results of
      operations of the Company.

5.    RELATED PARTY TRANSACTIONS

         The Company has an agreement with the general partner to operate and
      manage its cable systems. The fee for management services, in accordance
      with the Company's Partnership Agreement, is equal to 4% of annual
      revenues plus $5.00 per average annual subscriber. Management fees paid by
      the Company to the general partner amounted to $1,822,417, $1,904,984 and
      $1,868,165 in the years ended December 31, 1997, 1998 and 1999,
      respectively.

          Included in prepaid expenses and other assets are amounts  receivable
      from related parties which total $13,757 and $10,123 for the years ended
      December 31, 1998 and 1999, respectively.

          Included in accrued  expenses are amounts  payable to related  parties
      which total $13,029 and $3,079 for the years ended December 31, 1998 and
      1999, respectively.

6.    REGULATORY MATTERS

          The cable television industry is subject to extensive governmental
      regulation on the federal, state and local levels (but principally by the
      Federal Communications Commission ("FCC") and by local franchising
      authorities). Many aspects of such regulation have recently been
      extensively revised and are currently the subject of judicial proceedings
      and administrative rulemakings, which are potentially significant to the
      Company. In this regard, the Company believes that the regulation of cable
      television systems, including the rates charged for cable services,
      remains a matter of interest to Congress, the FCC and local regulatory
      officials. Critics of the cable television industry continue to seek to
      maintain or even tighten cable rate regulation in the absence


                                     FS-10

<PAGE>   45

      of widespread effective competition. Accordingly, no assurance can be
      given as to what future actions such parties or the courts may take or the
      effect thereof on the Company.

          Under the FCC's rate regulations, most cable systems were required to
      reduce their basic service and cable programming service tiers ("CPST")
      rates in 1993 and 1994, and have since had their rate increases governed
      by a complicated price cap scheme. Operators also have the opportunity of
      bypassing this "benchmark" regulatory scheme in favor of traditional "cost
      of service" in cases where the latter methodology appears favorable. The
      FCC also established a vastly simplified cost of service methodology for
      small cable companies. The 1996 Telecommunications Act terminated rate
      regulation of the CPST for all cable systems on March 31, 1999, however,
      rate regulation as described below continues to apply to the basic service
      tier.

          The Company, which qualifies as a small cable company under FCC rules,
      has elected to rely on the cost-of service rules as and when the Systems
      are required to justify their rates for regulated services and, therefore,
      has not implemented the rate reductions that would otherwise have been
      required if it were subject to the FCC's benchmarks. Under the
      cost-of-service rules applicable to small cable companies, eligible
      systems can establish permitted rates under a simple formula that
      considers total operating expenses (including amortization expenses), net
      rate base, rate of return, channel count and subscribers. If the per
      channel rate resulting from these inputs for a cable system is no more
      than $1.24, the cable system's rates will be presumed reasonable. If the
      formula generated rate exceeds the $1.24, the burden is on the cable
      operator to establish the reasonableness of its calculations.

         Substantially all of the Company's rates are currently under the $1.24
      per channel level, and the Company believes that all of its rates in
      excess of the $1.24 per channel level are reasonable using the formula
      described above. However, FCC rules permit local franchise authorities to
      review basic service rates, and under certain circumstances, challenge
      CPST rates at the FCC. An adverse ruling in any such proceeding could
      require the Company to reduce its rates and pay refunds. A reduction in
      the rates it charges for regulated services or the requirement that it pay
      refunds could have a material adverse effect on the Company. Once the
      maximum permitted rate allowed by FCC rules is being charged by the
      Company in regulated communities, 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.

         In addition, certain provisions of the Cable Television Consumer
      Protection and Competition Act of 1992 (the "1992 Cable Act") could in the
      future have a material adverse effect on the Company's business. In
      particular, the 1992 Cable Act conveyed to broadcasters the right
      generally to elect either to require (i) the local cable operator to carry
      their signal or (ii) that such operator obtain the broadcaster's consent
      before doing so. To date, compliance with these provisions has not had a
      material effect on the Company, 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. In this
      regard, a rulemaking is now pending at the FCC regarding the imposition of
      dual digital and analog must carry provisions.

7.    ACQUISITION OF CABLE SYSTEM

          On December 10, 1998, pursuant to an Asset Purchase Agreement dated as
      of June 24, 1998, the Company purchased the Cable Systems (as described
      below) of Fannon Cable T.V., Inc.

                                     FS-11

<PAGE>   46


      ("Fannon") for $7.65 million in cash. A portion of the purchase price was
      funded with a $3.5 million draw against James' existing $30 million
      revolving bank line of credit (Note 3). The remaining $4.15 million of the
      purchase price was funded with cash-on-hand.

          The acquired cable television systems (individually a "Cable System"
      and collectively the "Cable Systems") serve the communities of New
      Tazewell, Tazewell, Harrogate and Cumberland Gap and certain
      unincorporated portions of Claiborne County in the State of Tennessee.

          Included in the assets purchased were all necessary franchises, the
      rights to receive and distribute cable television signals to subscribers
      and all of the equipment and other personal and real property necessary
      for this reception and distribution of cable television signals to such
      communities. James intends to continue to use the assets in the same
      manner and for the same purpose as Fannon.

          The purchase price of $7.65 million, plus a commision of $150,000 paid
      to a broker, has been allocated among the following assets based on their
      estimated fair values and are being depreciated or amortized over the
      following lives:

<TABLE>
<CAPTION>
                                                      PURCHASE               DEPRECIATION /
                     ASSET                          PRICE ALLOC.           AMORTIZATION LIFE
<S>                                            <C>                        <C>
      Land                                      $             7,953               n/a
      Vehicles                                               28,483              5 Yrs.
      Non-Compete Agreement                                 305,882              5 Yrs.
      Goodwill                                            7,457,682             40 Yrs.
                                                -------------------
                     Total                      $         7,800,000
                                                ===================
</TABLE>



          The Company's statement of operations for the year ended December 31,
      1998 reflects the operations of the Cable Systems for the period from
      December 11 through 31, 1998. The following table summarizes the pro forma
      financial information of the Company for the years ended December 31, 1997
      and 1998 as if the acquisition of Fannon had occurred on January 1, 1997
      (unaudited):


<TABLE>
<CAPTION>
                                                     1997               1998
                                                     ----               ----
                                                          (in thousands)
<S>                                             <C>                 <C>
      Revenues                                   $ 37,568            $39,447
      Loss Before Extraordinary Item               (1,629)            (3,134)
      Net loss                                     (4,754)            (3,134)
</TABLE>



           This pro forma financial information is not necessarily indicative of
      what the actual results of operations of the Company would have been had
      the acquisition actually occurred as of January 1, 1997, nor does it
      purport to represent the results of the Company for future periods.

                                     FS-12

<PAGE>   47



8.       SALES OF CABLE SYSTEMS

          On March 5, 1999, pursuant to an Asset Purchase Agreement dated as of
      July 31, 1998, the Company sold its cable television systems, serving
      approximately 9,500 subscribers, in Pickett County, Scott County, Morgan
      County, Roane County, Fentress County and Cumberland County, Tennessee to
      Rapid Communications, L.P. for $14.7 million in cash.

         On March 31, 1999, pursuant to an Asset Purchase Agreement dated as of
      February 2, 1999, the Company sold its cable television system, serving
      approximately 1,700 subscribers, in Forsyth and Monroe County, Georgia to
      the City of Forsyth for $2.3 million in cash.

         The net gains on the above sales are calculated as follows:

<TABLE>
<CAPTION>
                                     Tennessee           Forsyth            Totals
                                     ---------           -------            ------
<S>                                <C>                <C>               <C>
      Net sale proceeds             $14,453,000        $2,292,000        $16,745,000
      Basis of assets sold              570,876           288,439            859,315
                             --------------------------------------------------------

      Gain on sale                  $13,882,124        $2,003,561        $15,885,685
                             ========================================================
</TABLE>


9.       OTHER ITEMS

         Effective December 29, 1999, with the approval of James' Partnership
      Advisory Board and more than 96% of its limited partners, the limited
      partnership agreement of James was amended and restated in its entirety.
      The James Cable Partners, L.P. Second Amended and Restated Agreement of
      Limited Partnership dated as of December 29, 1999 (the "Partnership
      Agreement") is substantially similar to James' prior limited partnership
      agreement. The most significant changes effected by such amendment and
      restatement include the creation of a second class of limited partnership
      interests and a reduction, from 96% or 66%, as applicable, to 51%, in the
      requisite percentage consent of limited partners necessary to undertake
      certain actions.

         In connection with the adoption of the Partnership Agreement, and with
      the approval of James' Partnership Advisory Board and its limited
      partners, (i) the incentive compensation payable by James to the general
      partner pursuant to the 1994 General Partner Incentive Compensation
      Agreement dated December 9, 1994 was converted to a 2% Class A limited
      partnership interest and (ii) the general partner was issued an option to
      acquire a Class B limited partnership interest of not more than 3.125% and
      not less than 2.5%.

                                     FS-13
<PAGE>   48
INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholder of
James Cable Finance Corp.
Bloomfield Hills, Michigan

We have audited the accompanying balance sheets of James Cable Finance Corp. (a
wholly owned subsidiary of James Cable Partners, L.P., a Delaware Limited
Partnership) ("Finance Corp.") at December 31, 1998 and 1999. These balance
sheets are the responsibility of the management of Finance Corp. Our
responsibility is to express an opinion on these balance sheets based on our
audits.

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

In our opinion, such balance sheets present fairly, in all material respects,
the financial position of James Cable Finance Corp. at December 31, 1998 and
1999 in conformity with generally accepted accounting principles.



/s/ DELOITTE & TOUCHE LLP

February 4, 2000
Detroit, Michigan



                                     FS-14

<PAGE>   49


                            JAMES CABLE FINANCE CORP.
            (A WHOLLY OWNED SUBSIDIARY OF JAMES CABLE PARTNERS, L.P.,
                        A DELAWARE LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                                     December 31,
                                                                                                 1998            1999
                                                                                                 ----            ----
                                                        ASSETS
<S>                                                                                             <C>             <C>
Cash and cash equivalents                                                                       $1,000          $1,000
                                                                                                ======          ======

                                                  SHAREHOLDER'S EQUITY

Shareholder's equity - Common stock, no par value  (1,000 shares issued and outstanding)        $1,000          $1,000
                                                                                                ======          ======
</TABLE>

                          See notes to balance sheets.



                                      FS-15
<PAGE>   50

                            JAMES CABLE FINANCE CORP.
            (A WHOLLY-OWNED SUBSIDIARY OF JAMES CABLE PARTNERS, L.P.,
                        A DELAWARE LIMITED PARTNERSHIP)

                             NOTES TO BALANCE SHEETS


1.  ORGANIZATION

    James Cable Finance Corp. ("Finance Corp."), a Michigan corporation, is a
wholly-owned subsidiary of James Cable Partners, L.P. ("James"), a Delaware
limited partnership, and was organized on June 19, 1997 (the "Date of
Inception") for the sole purpose of acting as co-issuer with James of $100
million aggregate principal amount of the 10-3/4% Senior Notes. Finance Corp.
has nominal assets and does not have (and is not expected to have) any material
operations.

2.  STATEMENTS OF OPERATIONS, SHAREHOLDER'S EQUITY AND CASH FLOWS

    Since there were no operations in the Finance Corp. from the Date of
Inception through December 31, 1999, a Statement of Operations, a Statement of
Shareholder's Equity and a Statement of Cash Flows have not been presented.


                                      FS-16

<PAGE>   51
                           JAMES CABLE PARTNERS, L.P.

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, James Cable Partners, L.P. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                            JAMES CABLE PARTNERS, L.P.

                            By:  James Communications Partners
                                General Partner

                            By: Jamesco, Inc.
                                Partner


                            By:   /s/ William R. James
                                 ---------------------
                                 William R. James
                                 President

                                 Date:  March 24, 2000

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

<TABLE>
<CAPTION>

    Signature                       Title                                    Date
    ---------                       -----                                    ----
<S>                                 <C>                                      <C>
                                    Person performing functions similar to
     /s/ William R. James           a director and a principal executive     March 24, 2000
    ---------------------           officer
    William R. James

                                    Person performing functions similar to
     /s/ C. Timothy Trenary         a director                               March 24, 2000
    -----------------------
    C. Timothy Trenary
                                    Person performing functions similar to   March 24, 2000
     /s/ Daniel K. Shoemaker        a director, a principal financial
    ------------------------        officer, and a principal accounting
    Daniel K. Shoemaker             officer
</TABLE>

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

    (c)  No annual report to security holders covering the registrants' last
         fiscal year or proxy material has been sent to security holders. If
         such report or proxy material is furnished to security holders
         subsequent to the filing of this form, the registrants will furnish
         copies of such material to the Commission when it is sent to security
         holders.


                                      -35-
<PAGE>   52



                            JAMES CABLE FINANCE CORP.

                                   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.

                            James Cable Finance Corp.


                            By: /s/ William R. James
                                --------------------
                                William R. James
                                President

                                Date:  March 24, 2000

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

<TABLE>
<CAPTION>

    Signature                             Title                                  Date
    ---------                             -----                                  ----
<S>                                      <C>                                     <C>
                                          Director; President (principal         March 24, 2000
     /s/ William R. James                 executive officer)
    ---------------------
    William R. James

     /s/ C. Timothy Trenary               Director; Vice President               March 24, 2000
    -----------------------
    C. Timothy Trenary

     /s/ Daniel K. Shoemaker              Director; Treasurer (principal         March 24, 2000
    ------------------------              financial officer and principal
    Daniel K. Shoemaker                   accounting officer)
</TABLE>


SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

    (c)  No annual report to security holders covering the registrants' last
         fiscal year or proxy material has been sent to security holders. If
         such report or proxy material is furnished to security holders
         subsequent to the filing of this form, the registrants will furnish
         copies of such material to the Commission when it is sent to security
         holders.



                                      -36-


<PAGE>   53


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

    EXHIBIT NUMBER         EXHIBIT DESCRIPTION

<S>                        <C>
    (3)(a)/(10)(c)         Second Amended and Restated Agreement of Limited Partnership of James Cable
                           Partners, L.P. dated as of December 29, 1999

    (4)(g)                 Second Amendment to the Credit Agreement dated as of December 31, 1999 among
                           James Cable Partners, L.P., the lenders party thereto, Bank One, Michigan
                           (formerly known as NBD Bank), as documentation agent, and Canadian Imperial
                           Bank of Commerce, as administrative agent.

    (4)(h)                 Option Agreement / Option Certificate dated as of December 29, 1999 by and
                           between James Cable Partners, L.P. and James Communications Partners.

    12                     Statement re computation of ratios

    24                     Powers of Attorney

    27                     Financial Data Schedule
</TABLE>





                                      -37-