<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, 2000

                                       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)

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

    38710 Woodward Avenue, Suite 180                     48304
       Bloomfield Hills, Michigan                     (Zip Code)
(Address of Principal Executive Offices)

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,
2001 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.
<S>                                                                                            <C>
                                     PART I
Item 1.     Business.........................................................................      3
                    General..................................................................      3
                    Business Strategy........................................................      3
                    Industry Overview........................................................      4
                    The Systems..............................................................      6
                    Programming and Subscriber Rates.........................................      9
                    Internet Services........................................................     10
                    Customer Service and Marketing...........................................     10
                    Technical Overview.......................................................     11
                    Franchises...............................................................     11
                    Competition..............................................................     12
                    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..............................     19

                                     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...........................................     25
                   Impact of Inflation and Changing Prices...................................     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, 2000, the Systems passed an estimated 129,600 homes and served
69,875 basic subscribers, representing a basic penetration of 53.9%. The
Company's goal is to maintain its position as the preferred provider of video
services, and to become the single hardwire broadband provider of enhanced video
services and advanced telecommunication services, in the markets that it serves.
James' principal executive offices are located at 38710 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.

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 two general partners, Jamesco, Inc. and DKS Holdings, Inc. See
"Part III-Item 10. Directors and Executive Officers." The General Partner's
principal executive office is located at 38710 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 10 -3/4% Series B Senior Notes due 2004 that the Company issued
during the second-half 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 38710 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
hardwire 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 is often 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 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
         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.


                                      -3-
<PAGE>   4
         As of December 31, 2000, the Company had completed the 750 MHz upgrades
         to cable plant serving approximately 32% of its basic subscribers and
         has also supplemented a portion of its 450 MHz cable plant with fiber
         to allow for the introduction of advanced telecommunications services
         to approximately 13% of its subscribers. 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 6,000
         subscribers. During 2000, approximately 50% of the Tennessee System
         subscribers were converted to the new 750 MHz cable plant which allows
         for the delivery of advanced telecommunications services. The
         construction for the remaining subscribers is expected to be completed
         by the end of 2001. Once the Tennessee upgrade is complete, the Company
         will have the ability to deliver advanced telecommunications services
         to approximately 50% of its 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, has launched Headend In The Sky(R) ("HITS"), a
         digital compression service developed by National Digital Television
         Center, Inc., a subsidiary of AT&T. HITS is currently available to
         nearly 50% of the Company's subscriber base. Alternatively, in Systems
         that do not offer HITS, the Company has launched its digital video
         solution utilizing Hits2Home ("H2H"). H2H was developed by the same
         group, and allows for the same digital services, as HITS. The
         difference is that with HITS the Company receives the digital signals
         at its headend sites, which requires a significant amount of upfront
         cost in equipment, and then sends the signal to its subscribers over
         its cable plant. With H2H there is a dish installed at the subscriber's
         house and they receive the digital signals directly, thus, there is no
         upfront cost for headend equipment. Both HITS and H2H allow the Company
         to deliver video services such as pay-per-view programming and tiered
         niche satellite programming. The Company believes that these enhanced
         digital video services will allow it to provide services comparable to
         DBS. At December 31, 2000 the HITS and H2H services were available to
         approximately 65% 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 and
         inter- and intra- network data services in many of its markets.

         As of December 31, 2000, the Company was offering either its two-way or
         one-way high-speed Internet services in portions of every Cluster and
         had more than 3,400 high-speed Internet customers. The Company intends
         to increase the number of high-speed Internet customers by (i)
         increasing its emphasis on marketing and customer based education
         regarding the benefits of high-speed Internet services and (ii)
         offering its high-speed services to additional subscribers as future
         rebuild and upgrade projects are completed.

         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. At December
         31, 2000, the Company had more than 3,800 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. However, the Company may consider acquisitions in other
         geographic areas which are 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.

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.


                                      -4-
<PAGE>   5
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") and Showtime) 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.

In addition to the above traditional cable television offerings, many cable
television systems have begun the process of upgrading or rebuilding their cable
plant to allow for the introduction of advanced telecommunications services such
as high-speed internet, digital compression services and telephony. This allows
the cable television systems to offer their subscriber base more services over
their already existing infrastructure and, of course, collect additional
revenues for installations and monthly fees for these new services.


                                      -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)
                                     1996         1997       1998 (1)     1999 (1)       2000
                                   --------     --------     --------     --------     --------
<S>                                <C>          <C>          <C>          <C>          <C>
Homes passed (2)                    129,291      129,291      138,040      129,600      129,600
Basic subscribers (3)                78,449       78,197       84,755       71,864       69,875
Basic penetration (4)                  60.7%        60.5%        61.4%        55.5%        53.9%
Basic revenues (5)                 $ 29,087     $ 29,978     $ 31,521     $ 30,737     $ 29,990
Average monthly basic
   revenues per subscriber (6)     $  30.47     $  31.92     $  33.35     $  34.18     $  35.61
Premium subscriptions (7)            25,652       24,076       26,413       23,001       22,713
Premium penetration (8)                32.7%        30.8%        31.2%        32.0%        32.5%
Average monthly total revenues
   per subscriber (6)              $  36.89     $  38.10     $  39.95     $  41.56     $  44.99
Average annual system operating
   cash flow per subscriber (9)    $    238     $    235     $    233     $    226     $    226
Average annual EBITDA per
   subscriber (10)                 $    207     $    202     $    195     $    188     $    196
Miles of plant                        3,483        3,483        3,883        3,254        3,282
</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. In
         addition, the basic subscriber number includes subscribers who are
         receiving the Company's services at a promotional rate.

(4)      Basic subscribers as a percentage of homes passed.

(5)      Basic revenues consist of monthly subscription fees for all services
         (other than premium programming, Internet services and digital
         services) 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 (See "Part II - Item 6. Selected Financial Data (Footnote 6)"
         for a definition of EBITDA).


                                      -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, 2000 for the individual clusters:

<TABLE>
<CAPTION>
                                                                                                               Average
                                                                                                               Monthly
                                                  Percent of                                                    Total
                      Estimated                  All Systems                                                   Revenues
                        Homes         Basic          Basic        Basic         Premium        Premium            per
    Cluster            Passed     Subscribers    Subscribers   Penetration   Subscriptions   Penetration      Subscriber
------------------    ---------   -----------    -----------   -----------   -------------   ------------    -----------
<S>                   <C>         <C>            <C>           <C>           <C>             <C>             <C>
Oklahoma / Texas         33,300        15,934           22.8%       47.8%            4,963       31.1%       $    47.47
Louisiana                25,700        12,383           17.7        48.2             4,486       36.2             46.27
Georgia                  19,700        11,756           16.8        59.7             4,969       42.3             47.62
Colorado / Wyoming       15,100         8,802           12.6        58.3             2,701       30.7             45.26
Alabama                  13,800         8,751           12.5        63.4             2,143       24.5             41.62
Florida                  10,000         6,268            9.0        62.7             2,396       38.2             48.83
Tennessee                12,000         5,981            8.6        49.8             1,055       17.6             31.12
                      ---------   -----------    -----------                 -------------

        Totals          129,600        69,875          100.0%       53.9%           22,713       32.5%       $    44.99
                      =========   ===========    ===========                 =============
</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 $13.9 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), 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.

The Company is currently offering its two-way high-speed Internet service to
approximately 5,700 subscribers and its one-way high-speed Internet service to
approximately 3,400 subscribers in its Oklahoma/Texas Cluster. In addition to
the high-speed Internet services, the Company is offering traditional dial-up
Internet service to certain portions of the Oklahoma/Texas Cluster. At December
31, 2000, the Oklahoma/Texas Cluster had approximately 1,060 high-speed Internet
customers and approximately 1,320 dial-up Internet customers.

The administrative, technical, marketing and customer service operations for
this cluster are consolidated into one main office located in Durant, Oklahoma.
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, 2000, 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 15,934 and 4,963, 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 $12.2 million in capital
expenditures, upgrading virtually all of these Systems to 450 MHz 60-channel
plants, installing three microwave complexes eliminating the need for eight
headends and supplementing its 450 MHz plant in and around Westlake with fiber
to allow for the introduction of advanced telecommunications services. At
December 31, 2000, the estimated number of homes passed for this Cluster was
25,700 and the number of basic subscribers and premium subscriptions were 12,383
and 4,486, respectively.

During 2000 the Company completed the reverse path activation of its fiber cable
plant in and around Westlake, Louisiana and is now offering its two-way
high-speed Internet service to approximately 6,700 subscribers. In addition, the
Company offers traditional dial-up service to certain portions of the Louisiana
Cluster. At December 31, 2000, the Louisiana Cluster had approximately 410
high-speed Internet customers and approximately 120 dial-up Internet customers.

Since acquiring the Louisiana Cluster, the Company has consolidated all
administrative, technical, marketing and customer service 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 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.


                                      -7-
<PAGE>   8
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 $12.9 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.

The Company is now offering its two-way high-speed Internet service to
approximately 6,700 subscribers and, in addition, is offering its one-way
high-speed Internet service to approximately 3,000 subscribers. In addition to
the high-speed Internet services, the Company is offering traditional dial-up
Internet service to certain portions of the Georgia Cluster. At December 31,
2000, the Georgia Cluster had approximately 500 high-speed Internet customers
and approximately 780 dial-up Internet customers.

At December 31, 2000, the Georgia Cluster passed an estimated 19,700 homes and
had 11,756 basic subscribers and 4,969 premium subscriptions. The Systems in
this Cluster operate primarily out of one office located in Eatonton, Georgia,
where all administrative, technical, marketing and customer service 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 $8.2 million in capital
expenditures to improve plant reliability, reception and service, including the
750 MHz HFC upgrade of the Systems serving Douglas, Torrington, Wheatland and
Lingle, Wyoming.

The Company is now offering its two-way high-speed Internet service to
approximately 5,500 subscribers. In addition, the Colorado/Wyoming Cluster is
offering traditional dial-up Internet service to certain portions of its
subscriber base. At December 31, 2000, the Colorado/Wyoming Cluster had
approximately 790 high-speed Internet customers and approximately 850 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,
2000, the estimated number of homes passed in this Cluster was 15,100 and the
number of basic subscribers and premium subscriptions were 8,802 and 2,701,
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 $6.4 million in capital expenditures, improving the channel
capacity in many of these Systems and improving reliability and channel
offerings, including the 750 MHz upgrade to the cable plant serving
approximately 2,400 subscribers in Roanoke and Wadley, Alabama.

The Company is now offering its two-way high-speed Internet service in Roanoke
and Wadley, as well as traditional dial-up Internet service to certain portions
of its Alabama Cluster. At December 31, 2000, the Alabama Cluster had
approximately 310 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 administrative, technical, marketing and customer
service operations have been centralized into the main office. The Alabama
Cluster, as of December 31, 2000, passed an estimated 13,800 homes and had 8,751
basic subscribers and 2,143 premium subscriptions.

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 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 $6.8 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
onto one microwave complex, which reduces maintenance and equipment costs.



                                      -8-
<PAGE>   9
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 certain portions of the Florida Cluster. At December 31, 2000, the
Florida Cluster had approximately 40 high-speed Internet customers and
approximately 110 dial-up Internet customers.

The Company's Florida Cluster operates from a centralized office in High
Springs, Florida. All administrative, technical, marketing and customer service
operations are coordinated from this location. The Florida Cluster, as of
December 31, 2000, passed an estimated 10,000 homes and had 6,268 basic
subscribers and 2,396 premium subscriptions.

The University of Florida, located in Gainesville, has contributed to the
economic stability of the communities served by the Florida Cluster. 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, marketing and customer service operations are coordinated out of one
central office located in Tazewell, Tennessee.

Since acquiring this Cluster, the Company has spent $6.2 million on capital
expenditures, the majority of which has been for the 750 MHz HFC upgrade that is
currently in process. During 2000, the Company converted approximately 50% of
the Tennessee Cluster's basic subscribers to its 750 MHz cable plant which
allowed for the introduction of advanced telecommunication services, including
its high-speed Internet. In addition, the Company is offering its dial-up
Internet service to all of the basic subscribers in the Tennessee Cluster. At
December 31, 2000, the Tennessee Cluster had approximately 290 high-speed
Internet customers and approximately 510 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, 2000, the Tennessee Cluster passed an
estimated 12,000 homes and had 5,981 basic subscribers and 1,055 premium
subscriptions.

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 portion 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 1998, 1999 and 2000,
programming costs as a percentage of revenues were 19.9%, 20.1% and 21.2%,
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.

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. In general, the Company offers 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). However, in some of its Systems the Company offers
only a single level of basic service containing both the broadcast and satellite
delivered programming. 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, and
pay-per-view, through HITS and H2H.



                                      -9-
<PAGE>   10
Monthly subscriber rates for services vary from market to market, primarily
according to the amount of programming provided. At December 31, 2000, the
Company's monthly full basic service rates for residential subscribers ranged
from $18.50 to $40.99 and per-channel premium service rates (not including
special promotions) ranged from $7.95 to $12.95 per service. At December 31,
2000, the weighted average price for the Company's monthly full basic service
was approximately $37.34.

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 and H2H services.

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, 2000 the Company had the capabilities of providing its
high-speed Internet service, via either one-way or two-way, to approximately 56%
of its basic cable subscribers. In addition, the Company, as of December 31,
2000, 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, 2000, the Company's monthly Internet rate (not including special promotions)
varied from $17.95, for a dial-up customer who also receives cable television,
to $54.95 for high-speed commercial customers.

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, HITS and H2H 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 and (v) monthly
billing statement inserts. There can be no assurance that the




                                      -10-
<PAGE>   11
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, 2000,
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)                      10              17               1             12               8              48
Number of subscribers as of
   December 31, 2000 (1)                 9,419          10,175             403         27,770          22,108          69,875
% of subscribers                          13.5%           14.6%            0.6%          39.7%           31.6%          100.0%
Miles of Plant                             621             622               6          1,288             745           3,282
% of miles of plant                       18.9%           19.0%            0.2%          39.2%           22.7%          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 entire Tennessee System which serves approximately 6,000
subscribers. During 2000, approximately 50% of the Tennessee System subscribers
were converted to the new 750 MHz cable plant which allows for the delivery of
advanced telecommunications services. The construction for the remaining
subscribers is expected to be completed by the end of 2001. Once the Tennessee
upgrade is complete, the Company will have the ability to deliver advanced
telecommunications services to approximately 50% of its 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 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 and H2H services. These services transmit digitally
compressed signals of niche satellite programming, multiplexed premium services,
pay-per-view movies and music.

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.

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, 2000, the Company held 118 franchises. These franchises, most 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


                                      -11-
<PAGE>   12
warranted by significantly 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,
2000:

<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 2003                   11          8.3%         3,932              5.6%
2003 - 2007                     34         25.8         20,401             29.2
2008 - 2011                     31         23.5         20,143             28.8
2012 and after (1)              38         28.8         19,714             28.3
No expiration date               4          3.0          1,534              2.2
                        ----------   ----------    -----------   --------------
     Subtotal                  118         89.4         65,724             94.1
No franchise required           14         10.6          4,151              5.9
                        ----------   ----------    -----------   --------------
     Total                     132        100.0%        69,875            100.0%
                        ==========   ==========    ===========   ==============
</TABLE>

(1)      Included in this category is the Company's franchise in Crawford,
         Georgia, which represents 181 basic subscribers. This franchise, which
         had expired on September 9, 2000, was renewed on January 11, 2001 for a
         term of 15 years and did not contain any significant changes from the
         prior franchise agreement.

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.

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 DVD and
videotape players. 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.



                                      -12-
<PAGE>   13
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 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 on the customers' 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 programming services 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.
Rural loan legislation was recently enacted to make local broadcast programming
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. DBS companies now need to secure
retransmission consent from the popular broadcast stations they wish to carry,
and they will face mandatory carriage obligations of less popular broadcast
stations as of January 2002. The Company's strategy of providing pay-per-view
and satellite niche programming, via its HITS and H2H applications, 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, which now have
approximately 14 million subscribers and are growing rapidly.

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 and 39
gigahertz ("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 such 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
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




                                      -13-
<PAGE>   14
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.

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, some of which are still subject to current challenges. 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.

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.



                                      -14-
<PAGE>   15
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.

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 during a five year phase-in period, beginning
in 2001, if the operator provides telecommunications service, as well as cable
service, over its plant. The FCC clarified that a cable operator's provision of
Internet service does not affect the favorable pole rates. However, a recent
decision by the Eleventh Circuit Court of Appeals disagreed, holding that
Internet traffic is neither cable service nor telecommunications service which
might leave cable attachments that carry Internet traffic ineligible for federal
protections. This decision could lead to substantial increases in pole
attachment rates, and certain utilities have already proposed vastly higher pole
attachment rates based, in part, on the existing court decision. The United
States Supreme Court is now reviewing this decision and the Eleventh Circuit's
mandate has been stayed pending this review. A variety of cable operators,
including the Company, are challenging certain pole attachment rates at the FCC.

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. A number of implementation details are subject to
ongoing regulatory and judicial review, but the basic requirement is now well
established.

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).

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.



                                      -15-
<PAGE>   16
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 established 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 District of Columbia Court of Appeals recently struck down both
rules as unconstitutional.

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
simultaneously carry all analog and digital signals transmitted by the
television stations during the multi-year transition in which a single broadcast
licensee is authorized to transmit both an analog and digital signal. The FCC
tentatively decided against imposition of dual digital and analog must carry in
a January 2001 ruling. At the same time, however, it initiated further
fact-gathering which ultimately could lead to a reconsideration of that
tentative conclusion. 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. Both Congress and the FCC have
considered proposals that would expand the program access rights of cable's
competitors, including the possibility of subjecting both terrestrially
delivered video programming, and video and video programmers who are not
affiliated with cable operators, to all program access requirements.

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 make 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).

Other FCC Regulations. In addition to the FCC regulations noted above, there are
other FCC regulations covering such areas as equal employment opportunity
(recently suspended by judicial ruling), 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, which began on July1, 2000, 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). 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




                                      -16-
<PAGE>   17
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. The Federal Trade Commission and the FCC recently imposed certain
open access requirements on Time Warner and AOL in connection with their merger,
but those requirements are not applicable to other cable operators. Some states
and LFAs are considering the imposition of mandatory Internet access
requirements as part of cable franchise renewals or transfer approvals. In June
2000, the Ninth Circuit Court of Appeals rejected an attempt by the City of
Portland, Oregon to impose mandatory Internet access requirements on the local
cable operator. In reversing a contrary ruling by the lower court, the Ninth
Circuit Court held that Internet service was not a cable service and, therefore,
could not be subject to local cable franchising.

In response to the Ninth Circuit decision, the FCC has initiated a new
proceeding to categorize cable-delivered Internet service and, perhaps,
establish an appropriate regulatory scheme. The Ninth Circuit decision is the
leading case on cable-delivered Internet service at this point. However, two
different federal district courts, in Virginia and Florida, recently reached a
similar deregulatory result, albeit using different legal analyses. If local or
state regulators are allowed to impose Internet access requirements on cable
operators it could have adverse effects on the Company's operations.

The FCC recently initiated an inquiry to determine whether the cable industry's
future provision on interactive services should be subject to regulations
ensuring equal access and competition among service vendors. The inquiry, which
grew out of the FCC's review of the AOL-Time Warner merger, is in its earliest
stages and represents yet another expression of regulatory concern regarding
control over cable capacity.

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 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. Tennessee and Florida, states where the Company
operates Systems, have enacted legislation with respect to the regulation of
cable




                                      -17-
<PAGE>   18
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, 2000, the Company had approximately 198 full-time employees and
4 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 (See "-Legal Proceedings"
and "Part I - Item 1. Business - Legislation and Regulation").

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.

On August 18, 2000, the Company, through its membership in the Alabama Cable
Telecommunications Association, joined other Alabama cable operators in a pole
attachment Complaint against Alabama Power Company ("APC") which was filed with
the FCC's Cable Service Bureau (the "Bureau"). The complaint was initiated as a
result of APC's imposition of significant pole rental rate increases (more than
500% for the Company), APC's refusal to engage in good faith negotiations and
the threat, by APC, to terminate existing pole attachment agreements. The Bureau
granted the Alabama cable operators, including the Company, all relief requested
in the Complaint. Specifically, the Bureau ruled that APC had failed to make a
persuasive argument on the merits that lawful just




                                      -18-
<PAGE>   19
compensation was greater than the current rate paid by the cable operators,
including the Company, under existing pole attachment agreements. Thus, the
Bureau declared APC's new pole attachment rental rates of $38.81 void and
reinstated the $7.47 rate previously in effect, as well as other terms and
conditions that APC had sought to terminate. The Bureau also placed the parties
under a bargaining order requiring good faith negotiation of a new pole
attachment agreement and a new rental rate utilizing the FCC's established
formulas.

As expected, on September 11, 2000, APC appealed the Bureau's decision to the
FCC's five Commissioner panel. This panel is expected to give a final decision
in the Spring of 2001. In addition, on September 12, 2000, APC appealed the
decision directly to the U.S. Court of Appeals for the Eleventh Circuit, which
has agreed to hear the case. Briefs are expected to be due during the Spring of
2001 and, thus, no decision will be forthcoming until later in the year.

It is also important to note that APC is not the only utility company to propose
significant pole attachment rental rate increases. For instance, Georgia Power
Company, which also provides pole attachments to the Company, has proposed an
even greater increase than APC, as well as an onerous new pole agreement. Both
the rates and the agreement are currently being challenged at the FCC, although
the Company is not involved as it is with the APC proceedings. Depending on the
final outcome of these proceedings, as well as others that may arise in the
future involving other utility companies, the Company could experience a
significant increase in its pole attachment rental costs and the results of its
operations could be negatively impacted if enough of its pole attachment rental
rates increased at this pace.

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

There were no matters submitted to a vote of James' limited partners or Finance
Corp.'s sole shareholder during the fourth quarter of 2000.

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, 2000, 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,
2000, 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,
2000. The financial data for the years ended December 31, 1996 to 2000 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, 1999 and 2000 and for each of the years in the
three-year period ended December 31, 2000, 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,
                                        1996            1997             1998 (15)          1999 (15)         2000
                                      ---------       ---------          ---------          ---------       ---------
<S>                                   <C>             <C>                <C>                <C>             <C>
STATEMENT OF OPERATIONS DATA:
Revenues                              $  35,213       $  35,778          $  37,758          $  37,372       $  37,893
System operating expenses (1)            16,249          17,400             19,410             20,445          22,011
Non-system operating expenses (2)         2,480           2,585              2,960              2,831           2,134
Depreciation and amortization             9,272           7,930              7,561              8,013           9,164
                                      -------------------------------------------------------------------------------
Operating income                          7,212           7,863              7,827              6,083           4,584
Interest expense, net                     8,852           9,470             11,026             11,020          11,213
General partner incentive payment            --              --                 --                540               0
Other expenses, net                         254             233                112                109             109
                                      -------------------------------------------------------------------------------
Loss before gains on sales and
   extraordinary items                   (1,894)         (1,840)            (3,311)            (5,586)         (6,738)
Gains on sales of cable
   systems                                   --              --                 --             15,886              --
Extraordinary loss due to debt
   refinancing                               --           3,125                 --                 --              --
                                      -------------------------------------------------------------------------------
Net (loss) income                     ($  1,894)      ($  4,965)         ($  3,311)         $  10,300       ($  6,738)
                                      ===============================================================================
OTHER DATA:
EBITDA (3)                            $  16,484       $  15,793          $  15,388          $  14,096       $  13,748
System operating cash flow (4)           18,964          18,378             18,348             16,927          15,882
Capital expenditures                      3,942           7,596              9,171             11,767           9,181
EBITDA margin (5)                          46.8%           44.1%              40.8%              37.7%           36.3%
Ratio of earnings to fixed
   charges (6)                               --              --                 --               1.9x              --

CASH FLOW DATA:
Cash provided by operating
   activities                         $   9,066       $   8,403          $   5,133          $   3,706       $   2,579
Cash (used in) provided by
   investing activities                  (3,942)         (7,596)           (16,971)             3,671          (9,323)
Cash (used in) provided by
   financing activities                  (6,079)          8,995              3,400             (3,500)          2,500
                                      -------------------------------------------------------------------------------
Net increase (decrease) in cash       ($    955)      $   9,802          ($  8,438)         $   3,877       ($  4,244)
                                      ===============================================================================

SUMMARY SUBSCRIBER DATA:
Homes passed (7)                        129,291         129,291            138,040            129,600         129,600
Basic subscribers (8)                    78,449          78,197             84,755             71,864          69,875
Basic penetration (9)                      60.7%           60.5%              61.4%              55.5%           53.9%
Premium subscriptions (10)               25,652          24,076             26,413             23,001          22,713
Premium penetration (11)                   32.7%           30.8%              31.2%              32.0%           32.5%
Average monthly total revenues
   per subscriber (12)                $   36.89       $   38.10          $   39.95          $   41.56       $   44.99
System operating cash flow per
   subscriber (13)                    $     238       $     235          $     233          $     226       $     226
EBITDA per subscriber (14)            $     207       $     202          $     195          $     188       $     196
</TABLE>

<TABLE>
<CAPTION>
                                                                      AT DECEMBER 31,
                                         1996            1997               1998               1999            2000
                                      ---------       ---------          ---------          ---------       ---------
<S>                                   <C>             <C>                <C>                <C>             <C>
BALANCE SHEET DATA:
Cash and cash equivalents             $     101       $   9,903          $   1,465          $   5,342       $   1,099
Total assets                             32,844          43,912             44,367             51,799          47,321
Total debt                               82,494         100,000            103,500            100,000         102,500
Partners' deficit                       (56,346)        (65,711)           (69,022)           (58,183)        (64,914)
</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. In addition, the calculation of
         EBITDA for the Company may differ from EBITDA calculations of other
         companies.

(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 $1.9 million, $1.8 million, $3.3 million and $6.7 million
         for the years ended December 31, 1996, 1997, 1998 and 2000,
         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. In
         addition, the basic subscriber number includes subscribers who are
         receiving the Company's services at promotional rates.

(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 at December 31, 1999 and 2000, and its results of operations for each
of the years ended December 31, 1998, 1999 and 2000. 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, Internet services and digital
services) 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. Digital services revenue
includes monthly subscription fees for tiers of digital programming and fees
charged for pay-per-view movies, concerts and sporting events. 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, 2000, the Company had 69,875 basic subscribers and 22,713
premium subscriptions, representing basic penetration of 53.9% and premium
penetration of 32.5%. 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,
                                             1998       1999       2000
                                           ------     ------     ------
<S>                                        <C>        <C>        <C>
Basic                                        83.5%      82.3%      79.1%
Premium                                       8.7        7.9        7.4
Internet                                      0.3        2.1        5.1
Digital                                       0.0        0.1        0.9
Other                                         7.5        7.6        7.5
                                           ------     ------     ------
                                            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, digital 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, premium and digital 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 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, 2000, the Company's debt was $102.5
million, its total assets were $47.3 million, and its partners' deficit was
$64.9 million. During the period from December 31, 2000 to March 2, 2001, the
Company was in default of a debt to EBITDA ratio covenant under its credit
facility. During the period from February 15, 2001 to March 2, 2001, the Company
was also in default of its obligation to pay interest on its 10 -3/4% Series B
Senior Notes due 2004. On March 2, 2001, the Company amended and restated its
secured credit facility with four new lenders which will permit it to borrow up
to $30 million. Approximately $18 million of the available credit was then drawn
down to pay accrued interest on the Company's Series B Senior Notes and to
purchase $12 million (face amount) of those Notes from affiliates of the
lenders. The remaining credit available may be used, among other things, to (i)
provide for working capital and general partnership purposes, (ii) make
acquisitions of cable television systems, (iii) pay future installments of
interest on the Company's Series B Senior Notes, and (iv) to finance capital
improvements.

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>
                                       1998         1999        2000
                                      ------       ------      ------
<S>                                   <C>          <C>         <C>
Revenues                               100.0%       100.0%      100.0%
System operating expenses               51.4         54.7        58.1
Non-system operating expenses            7.9          7.6         5.6
Depreciation and amortization           20.0         21.4        24.2
                                      ------       ------      ------
Operating income                        20.7         16.3        12.1
Interest expense, net                   29.2         29.5        29.6
General partner incentive payment        0.0          1.4         0.0
Other expenses, net                      0.3          0.3         0.3
                                      ------       ------      ------
Loss before gains on sales of
   cable systems                        (8.8)       (14.9)      (17.8)
Gains on sales of cable
   systems                                --         42.5          --
                                      ------       ------      ------
Net (loss) income                       (8.8)%       27.6%      (17.8)%
                                      ======       ======      ======

EBITDA margin                           40.8%        37.7%       36.3%
</TABLE>

RESULTS OF OPERATIONS -- YEAR ENDED DECEMBER 31, 2000 VERSUS YEAR ENDED DECEMBER
31, 1999:

Revenues. Revenues increased by $500,000, or 1.4%, from $37.4 million in 1999 to
$37.9 million in 2000. This increase is primarily the result of an increase in
the Company's Internet and digital revenues of $1.4 million from 1999 to 2000
which was partially offset by a $900,000 decrease in its basic and premium
revenues for the same periods. The decrease in the Company's basic and premium
revenues are a direct result of the decrease in the Company's subscriber base
discussed below. Average basic revenues per subscriber per month increased from
$34.18 to $35.61, or 4.2%, between 1999 and 2000 due to rate increases imposed
by the Company during 1999 and 2000.

Subscribers. At December 31, 2000 the Company had 69,875 subscribers which
represents a decrease of 1,989 from the 71,864 subscribers at December 31, 1999.
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.

At December 31, 2000 the Company had approximately 3,400 high-speed Internet
customers and approximately 3,800 dial-up Internet customers, for a total of
approximately 7,200 Internet customers. This represents an increase of
approximately 3,400, or 90%, from the approximately 3,800 Internet customers at
December 31, 1999. In addition, the Company had installed its digital services,
either HITS or H2H, at approximately 5,000 of its basic subscriber homes as of
December 31, 2000.

System Operating Expenses. System operating expenses increased 7.7% from $20.4
million in 1999 to $22.0 million in 2000. This increase resulted primarily from
additional costs related to the launching of Internet and digital services in
many of the Company's Systems during 2000, increases in programming costs
associated with new channel offerings and increased rates charged by programming
suppliers, and increased marketing costs associated with the Company's marketing
campaigns. As a percentage of revenues, system operating expenses increased by
3.4% from 54.7% in 1999 to 58.1% in 2000.

Non-System Operating Expenses. Non-system operating expenses decreased 24.6%
from $2.8 million in 1999 to $2.1 million in 2000. This decrease is primarily
the result of a $350,000 decrease in legal and other professional fees as well
as a decrease of $300,000 in the management fees paid to the Company's general
partner.

EBITDA. As a result of the foregoing, EBITDA in 2000 was $13.8 million, a
decrease of 2.5% from EBITDA in 1999 of $14.1 million.



                                      -23-
<PAGE>   24
Depreciation and Amortization. Depreciation and amortization increased 14.4%
from $8.0 million in 1999 to $9.2 million in 2000, due to the capital
expenditures associated with the Company's ongoing upgrades as well as equipment
associated with the launching of Internet and digital services in many of the
Company's Systems.

Interest Expense, Net. Interest expense, net increased by $200,000, or 1.8%,
from $11.0 million in 1999 to $11.2 million in 2000. This increase is primarily
a result of interest paid on the Company's Credit Facility during 2000, as well
as a decrease in the amount of interest capitalized from 1999 to 2000.

Loss before Gains on Sales. As a result of the foregoing factors, and despite a
general partner incentive payment of $500,000 paid in 1999, the Company's loss
before gains on sales increased $1.1 million from $5.6 million in 1999 to $6.7
million in 2000.

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 in 1999,
the Company experienced net income of $10.3 million in 1999 as compared to a net
loss of $6.7 million in 2000.

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 Forsyth 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 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.

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.



                                      -24-
<PAGE>   25
LIQUIDITY AND CAPITAL RESOURCES:

General. Liquidity describes the ability to generate sufficient cash flows to
meet the cash requirements of continuing operations and to pay obligations as
they mature. 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 in an effort to maintain adequate balances
for current payments.

Net cash from operating activities was $5.1 million, $3.7 million and $2.6
million for the years ended December 31, 1998, 1999 and 2000, respectively. Net
cash used in investing activities was $9.3 million for the year ended December
31, 2000 as compared to net cash from investing activities of $3.7 million for
the year ended December 31, 1999. This change in investing activities was
primarily due to 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 decreased from $11.8 million in 1999 to $9.1 million in 2000 as a
result of a decrease in the number of rebuild and upgrades that the Company had
in process during 2000 as compared to 1999. The net cash used in investing
activities for the year ended December 31, 1998 was $17 million which was used
for the purchase of the cable systems in and around Tazewell, Tennessee as well
as for capital expenditures, including the Company's rebuild and upgrade
program. Cash flows from financing activities for the year ended December 31,
2000 were $2.5 million, which represented the Company's net debt borrowings
against its Credit Facility. Cash flows used in financing activities for the
year ended December 31, 1999 amounted to $3.5 million of principal payments that
the Company made on its Credit Facility.

Total assets decreased $4.5 million from $51.8 million at December 31, 1999 to
$47.3 million at December 31, 2000. This decrease resulted from significant
changes in the Company's cash, net property and equipment, and net intangible
assets. Cash decreased by $4.2 million primarily as a result of interest
payments made on the Notes as well as capital spending associated with the
Company's rebuild and upgrade programs and the launching of Internet and digital
services in many of its Systems. Net property and equipment increased by $2.2
million as a result of the Company's capital improvement projects which were in
process during 2000. Net intangible assets decreased $2.0 million primarily as a
result of the 2000 amortization expense.

Total debt increased from $100.0 million at December 31, 1999 to $102.5 million
at December 31, 2000. This $2.5 million increase in debt was the direct result
of the Company's net borrowings against its Credit Facility to help fund the
August 15, 2000 interest payment on the Notes. During the period from December
31, 2000 to March 2, 2001, the Company was in default of a debt to EBITDA ratio
covenant under its credit facility. During the period from February 15, 2001 to
March 2, 2001, the Company was also in default of its obligation to pay interest
on its 10-3/4% Series B Senior Notes due 2004. As discussed below, on March 2,
2001, the Company amended and restated its secured credit facility with four new
lenders which will permit it to borrow up to $30 million. Approximately $18
million of the available credit was then drawn down to pay accrued interest on
the Company's Series B Senior Notes and to purchase $12 million (face amount) of
those Notes from affiliates of the lenders. The remaining credit available may
be used, among other things, to (i) provide for working capital and general
partnership purposes, (ii) make acquisitions of cable television systems, (iii)
pay future installments of interest on the Company's Series B Senior Notes, and
(iv) to finance capital improvements.

As of December 31, 2000, the Company had completed the 750 MHz upgrades to cable
plant serving approximately 32% of its basic subscribers and has also
supplemented a portion of its 450 MHz cable plant with fiber to allow for the
introduction of advanced telecommunications services to approximately 13% of its
subscribers. 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 6,000 subscribers. During 2000, approximately 50% of the Tennessee
System subscribers were converted to the new 750 MHz cable plant which allows
for the delivery of advanced telecommunications services. The construction for
the remaining subscribers is expected to be completed by the end of 2001. Once
the Tennessee upgrade is complete, the Company will have the ability to deliver
advanced telecommunications services to approximately 50% of its 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.



                                      -25-
<PAGE>   26
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 $30 million credit facility with four
independent lenders that matures on March 2, 2004. Approximately $18 million of
the available credit has been drawn down to pay accrued interest on the
Company's Series B Senior Notes and to purchase $12 million (face value) of the
Notes from affiliates of the lenders. The remaining credit available may be
used, among other things, to (i) provide for working capital and general
partnership purposes, (ii) make acquisitions of cable television systems, (iii)
pay future installments of interest on the Company's Series B Senior Notes, and
(iv) to finance capital improvements.

The Credit Facility, which is secured by a first priority lien on and security
interest in substantially all of the assets of the Company, requires monthly
payments of accrued interest with the principal payable at maturity. The Credit
Facility contains certain covenants, and provides for certain events of default,
customarily contained in facilities of a similar type. Among other things, the
Credit Facility requires the Company to (i) maintain the ratio of its total debt
to annualized six-month EBITDA of no more than 9.50 to 1 and (ii) maintain a
senior debt ratio (that is, the ratio of debt under the Credit Facility to
annualized six-month EBITDA) of no more than 2.30 to 1. In addition, the Credit
Facility imposes limitations on the amount of capital expenditures that the
Company can make for the remainder of the term. Generally, capital expenditures
are limited to $12 million per annum plus any unused portion of the capital
expenditure allowance from the previous year.

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.

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. In
June 2000, the FASB issued SFAS No. 138, which amended certain provisions of
SFAS No. 133. SFAS No. 133, as amended, 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.

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>



                                      -26-
<PAGE>   27
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 1996, 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. Notwithstanding the various Systems that we have
purchased and sold, our total subscribers have decreased by approximately 5.8%
between December 31, 1996 and December 31, 2000. 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 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 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, 2000 we had successfully launched
commercial Internet service in certain portions 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 (including improved DBS
                  offerings) 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
regulatory officials. These regulations, which have removed some barriers to
competition and added materially to the regulatory burdens of cable operators,
are 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;





                                      -27-
<PAGE>   28
         -        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

         -        rules against 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. 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, 2000, we had 11 franchises (representing 5.6% of
our basic subscribers), not including the one franchise discussed below that had
expired, expiring prior to 2003 and 34 franchises (representing 29.2% of our
basic subscribers) expiring between 2003 and 2007.

Our franchise in Crawford, Georgia, representing 181 basic subscribers, had
expired on September 30, 2000 and was renewed on January 11, 2001. This renewal
was for a term of 15 years and contained no significant changes from the
previous franchise agreement.

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.



                                      -28-
<PAGE>   29
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, including William R. James, who
functions as our principal executive officer, Daniel K. Shoemaker, who functions
as our principal financial and accounting officer, and Scott A. Madison, who
functions as our director of engineering. We could be adversely affected,
however, if any of Messrs. James, 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 Mr. 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, 2000 and 1999, or at
December 31, 2000 or 1999, 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, 2000.

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 two partners, Jamesco Inc., a Michigan corporation (of
which William R. James 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 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.............       67    President and
                                                     Chief Executive Officer
           Daniel K. Shoemaker..........       38    Chief Financial Officer
           Scott A. Madison.............       43    Director of Engineering
</TABLE>

Messrs. James 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.

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 approximately $1,905,000, $1,868,000 and $1,567,000 in
1998, 1999 and 2000, 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%.



                                      -30-
<PAGE>   31
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, 2000,
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
Daniel K. Shoemaker(3).............................................................         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 99.0% 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 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>
    (3)(a)/(10)(a)                      Second Amended and Restated Agreement of Limited Partnership of James Cable
                                        Partners, L.P. dated as of December 29, 1999, as amended by a First Amendment
                                        to Second Amended and Restated Agreement of Limited Partnership dated as of
                                        March 1, 2001.*

    (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 March 2, 2001 between James Cable Partners,
                                        L.P., as Borrower, and the Lenders listed therein.*

    (4)(c)                              Company Security Agreement dated as of March 2, 2001 between James Cable
                                        Partners, L.P., as Grantor, and GoldenTree Asset Management LLC, as agent for
                                        the Lenders.*

    (4)(d)                              Guaranty Agreement dated as of March 2, 2001 by James Cable Finance Corp., in
                                        favor of each of the Lenders.*

    (4)(e)                              Guarantor Security Agreement dated as of March 2, 2001 between James Cable
                                        Finance Corp., as Grantor, and GoldenTree Asset Management LLC, as agent for
                                        the Lenders.*

    (4)(h)                              Option Agreement / Option Certificate dated as of December 29, 1999 by and
                                        between James Cable Partners, L.P. and James Communications Partners
                                        (incorporated by reference to Exhibit (4)(h) of the registrant's Form 10-K as
                                        filed with the Securities and Exchange Commission for the year ended December
                                        31, 1999).

    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.*
</TABLE>
    --------------------------
    *    Filed herewith.




                                      -32-
<PAGE>   33
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:

    (3)(a)/(10)(a)   Second Amended and Restated Agreement of Limited
                     Partnership of James Cable Partners, L.P. dated as of
                     December 29, 1999, as amended by a First Amendment to
                     Second Amended and Restated Agreement of Limited
                     Partnership dated as of March 1, 2001.*

    (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 (incorporated by reference to
                     Exhibit (4)(h) of the registrant's Form 10-K as filed with
                     the Securities and Exchange Commission for the year ended
                     December 31, 1999).

    *    FILED HEREWITH

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, 1999 and 2000.............................     FS-2
       Consolidated statements of operations for each of the years ended December 31, 1998,
       1999 and 2000............................................................................     FS-3
       Consolidated statements of partners' deficit for each of the years ended December 31,
       1998, 1999 and 2000......................................................................     FS-4
       Consolidated statements of cash flows for each of the years ended December 31, 1998,
       1999 and 2000............................................................................     FS-5
       Notes to consolidated financial statements...............................................     FS-6
    James Cable Finance Corp.:
       Independent Auditors' Report.............................................................     FS-15
       Balance sheets as of December 31, 1999 and 2000..........................................     FS-16
       Notes to balance sheets..................................................................     FS-17
</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, 1999 and 2000,
and the related consolidated statements of operations, partners' deficit and
cash flows for each of the three years in the period ended December 31, 2000.
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 auditing standards generally accepted
in the United States of America. 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, 1999 and 2000, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Deloitte & Touche LLP

March 2, 2001
Detroit, Michigan

                                      FS-1
<PAGE>   36
                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                             --------------------------------
                                                                                  1999               2000
                                                                             -------------      -------------
<S>                                                                          <C>                <C>
                                     ASSETS
Cash and cash equivalents                                                    $   5,342,420      $   1,098,890
Accounts receivable - Subscribers (net of allowance for doubtful
      accounts of $ 28,141 in 1999 and $ 15,878 in 2000)                         3,356,444          3,629,802
Prepaid expenses and other assets (Note 5)                                         180,635            151,044
Property and equipment: (Note 7)
      Cable television distribution systems and equipment                       87,448,177         94,848,859
      Land and land improvements                                                   296,681            309,378
      Buildings and improvements                                                   988,121          1,043,325
      Office furniture and fixtures                                              2,169,720          3,475,706
      Vehicles                                                                   3,592,938          3,999,658
                                                                             -------------      -------------
           Total                                                                94,495,637        103,676,926
      Less accumulated depreciation                                            (70,686,387)       (77,702,751)
                                                                             -------------      -------------
           Total                                                                23,809,250         25,974,175
Deferred financing costs (net of accumulated amortization of $ 1,474,393
      in 1999 and $ 2,105,278 in 2000)                                           2,736,769          2,105,884
Intangible assets, net (Notes 2 and 7)                                          16,353,084         14,347,214
Deposits                                                                            20,842             13,942
                                                                             -------------      -------------
           Total assets                                                      $  51,799,444      $  47,320,951
                                                                             =============      =============

                       LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
      Debt (Notes 3 and 10)                                                  $ 100,000,000      $ 102,500,000
      Accounts payable                                                             272,588            116,293
      Accrued expenses (Note 5)                                                  2,584,667          2,432,148
      Accrued interest on 10-3/4% Senior Notes (Note 3 and 10)                   4,031,249          4,031,249
      Unearned revenue                                                           3,072,305          3,136,069
      Subscriber deposits                                                           21,451             19,679
                                                                             -------------      -------------
           Total                                                               109,982,260        112,235,438
Commitments and contingencies (Notes 4 and 6)                                           --                 --
Partners' deficit:
      Limited Partners ("L.P.")                                                (52,314,823)       (58,727,563)
      General Partner ("G.P.")                                                  (5,867,993)        (6,186,924)
                                                                             -------------      -------------
           Total                                                               (58,182,816)       (64,914,487)
                                                                             -------------      -------------
           Total liabilities and partners' deficit                           $  51,799,444      $  47,320,951
                                                                             =============      =============
</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,
                                                     ------------------------------------------------
                                                         1998              1999              2000
                                                     ------------      ------------      ------------
<S>                                                  <C>               <C>               <C>
Revenues                                             $ 37,757,809      $ 37,371,831      $ 37,893,244
System operating expenses (excluding
      depreciation and amortization)                   19,409,691        20,444,576        22,010,978

Non-system operating expenses:
      Management fee (Note 5)                           1,904,984         1,868,165         1,566,644
      Other                                             1,054,698           963,114           568,059
                                                     ------------      ------------      ------------
           Total non-system operating expenses          2,959,682         2,831,279         2,134,703

Depreciation and amortization                           7,561,451         8,013,278         9,163,834
                                                     ------------      ------------      ------------
           Operating income                             7,826,985         6,082,698         4,583,729
Interest and other:
      Interest expense                                (11,383,449)      (11,158,350)      (11,309,334)
      Interest income                                     357,138           138,524            96,394
      General partner incentive payment (Note 9)                0          (540,000)                0
      Other (Note 3)                                     (111,544)         (109,063)         (108,681)
                                                     ------------      ------------      ------------
           Total interest and other                   (11,137,855)      (11,668,889)      (11,321,621)
                                                     ------------      ------------      ------------

Loss before gains on sales of cable systems            (3,310,870)       (5,586,191)       (6,737,892)

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

           Net (loss) income                         $ (3,310,870)     $ 10,299,494      $ (6,737,892)
                                                     ============      ============      ============
</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, 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)
      Net loss                   (6,418,961)         (318,931)       (6,737,892)
      Capital contribution            6,221                 0             6,221
                               ------------      ------------      ------------
Balance, December 31, 2000     $(58,727,563)     $ (6,186,924)     $(64,914,487)
                               ============      ============      ============
</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,
                                                       ------------------------------------------------
                                                           1998              1999              2000
                                                       ------------      ------------      ------------
<S>                                                    <C>               <C>               <C>
Cash Flows from Operating Activities:
       Net (loss) income                               $ (3,310,870)     $ 10,299,494      $ (6,737,892)
       Adjustments to reconcile net (loss ) income
            to net cash from operating activities:
            Depreciation                                  3,940,390         5,534,440         7,016,364
            Amortization                                  3,621,061         2,478,838         2,147,470
            Noncash interest expense                        616,302           630,885           630,885
            Gains on sales of cable systems                               (15,885,685)
            Noncash incentive payment                                         540,000
            Capital contribution                                                                  6,221
            (Increase) decrease in assets:
                 Accounts receivable                        (75,161)           63,062          (273,358)
                 Prepaid expenses                            73,390           (40,209)           29,591
                 Deposits                                     2,550            (7,610)            6,900
            Increase (decrease) in liabilities:
                 Accounts payable                            60,823           (34,070)         (156,295)
                 Accrued expenses                            83,239           168,200          (152,519)
                 Accrued interest on 10-3/4%
                    Senior Notes                                  0                 0                 0
                 Unearned revenue                           123,760           (39,434)           63,764
                 Subscriber deposits                         (1,855)           (1,973)           (1,772)
                                                       ------------      ------------      ------------
                    Total adjustments                     8,444,499        (6,593,556)        9,317,251
                                                       ------------      ------------      ------------
                    Net cash flows from
                       operating activities               5,133,629         3,705,938         2,579,359

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 Internet businesses                                       (555,720)          (41,600)
       Purchase of Lusk, Wyoming fiber                                                         (225,000)
       Net proceeds from sales of systems                                  16,745,000
       Additions to property and equipment               (9,171,278)      (11,767,017)       (9,056,289)
                                                       ------------      ------------      ------------
                 Net cash flows (used in) from
                    investing activities                (16,971,278)        3,671,289        (9,322,889)

Cash Flows from (used in) Financing Activities:
       Principal payments on debt                                          (3,500,000)       (1,500,000)
       Proceeds from debt borrowings                      3,500,000                           4,000,000
       Deferred financing costs                            (100,000)
                                                       ------------      ------------      ------------
                Net cash flows from (used in)
                    financing activities                  3,400,000        (3,500,000)        2,500,000
                                                       ------------      ------------      ------------

Net (Decrease) Increase in Cash and
       Cash Equivalents                                  (8,437,649)        3,877,227        (4,243,530)

Cash and Cash Equivalents, Beginning of Year              9,902,842         1,465,193         5,342,420
                                                       ------------      ------------      ------------

Cash and Cash Equivalents, End of Year                 $  1,465,193      $  5,342,420      $  1,098,890
                                                       ============      ============      ============

Supplemental Disclosure of Cash Flow Information
       - Cash paid for interest during the period
       (Net of amounts capitalized)                    $ 10,750,000      $ 10,544,612      $ 10,644,220
                                                       ============      ============      ============
</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, as amended by a
         First Amendment to Second Amended and Restated Agreement of Limited
         Partnership dated as of March 1, 2001 (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 years ended
         December 31, 1999 and 2000, the Company capitalized interest of
         $295,223 and $211,263, respectively. 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.

         VALUATION OF LONG-LIVED ASSETS. The Company reviews the carrying value
         of long-lived assets, including goodwill and other intangible assets,
         for impairment whenever events, or changes in circumstances, indicate
         that the carrying amount may not be recoverable.

         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. In June 2000, the FASB issued SFAS No. 138, which amended
         certain provisions of SFAS No. 133. SFAS No. 133, as amended,
         establishes accounting and reporting standards for


                                      FS-7
<PAGE>   42
         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 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, 1999                December 31, 2000
                    ---------------------            ---------------------
                    Carrying        Fair             Carrying        Fair
                     Amount         Value             Amount         Value
                    --------       ------            --------        -----
<S>                 <C>            <C>               <C>             <C>
The Notes            $100.0        $100.5             $100.0         $63.0
</TABLE>

2.       INTANGIBLE ASSETS

         Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                     1999              2000
<S>                                              <C>               <C>
Franchise operating rights                       $ 52,995,548      $ 52,995,548
Subscriber lists                                   12,090,720        12,122,320
Covenants not to compete                           12,994,200        13,104,200
Goodwill                                           16,585,782        16,585,782
Organization costs                                  1,248,020         1,248,020
                                                 ------------      ------------
           Total                                   95,914,270        96,055,870
Less accumulated amortization                     (79,561,186)      (81,708,656)
                                                 ------------      ------------

Total                                            $ 16,353,084      $ 14,347,214
                                                 ============      ============
</TABLE>

3.       DEBT

         Debt consists of the following:

<TABLE>
<CAPTION>
                                               1999             2000
<S>                                        <C>              <C>
10-3/4% Series B Senior Notes due 2004     $100,000,000     $100,000,000
Bank Credit Facility                                 --        2,500,000
                                           ------------     ------------
Total                                      $100,000,000     $102,500,000
                                           ============     ============
</TABLE>


                                      FS-8
<PAGE>   43
         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 $30 million credit facility
         with four independent lenders that matures on March 2, 2004 (see Note
         10 below). Approximately $18 million of the available credit has been
         drawn down to pay accrued interest on the Company's Series B Senior
         Notes and to repurchase $12 million (face value) of the Notes from
         affiliates of the lenders. The remaining credit available may be used,
         among other things, to (i) provide for working capital and general
         partnership purposes, (ii) make acquisitions of cable television
         systems, (iii) pay future installments of interest on the Company's
         Series B Senior Notes, and (iv) to finance capital improvements.

                  The Credit Facility, which is secured by a first priority lien
         on and security interest in substantially all of the assets of the
         Company, requires monthly payments of accrued interest with the
         principal payable at maturity. The Credit Facility contains certain
         covenants, and provides for certain events of default, customarily
         contained in facilities of a similar type. Among other things, the
         Credit Facility requires the Company to (i) maintain the ratio of its
         total debt to annualized six-month EBITDA of no more than 9.50 to 1 and
         (ii) maintain a senior debt ratio (that is, the ratio of debt under the
         Credit Facility to annualized six-month EBITDA) of no more than 2.30 to
         1. In addition, the Credit Facility imposes limitations on the amount
         of capital expenditures that the Company can make for the remainder of
         the term. Generally, capital expenditures are limited to $12 million
         per annum plus any unused portion of the capital expenditure allowance
         from the previous year.

                  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, 1998, 1999 and 2000
         were $113,297, $110,818 and $109,531, 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 $90,897, $113,556 and
         $112,613 for the years ended December 31, 1998, 1999 and 2000,
         respectively.


                                      FS-9
<PAGE>   44
                  The Company is committed to monthly pole rentals of $46,356 as
         of December 31, 2000, 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 $1,904,984,
         $1,868,165 and $1,566,644 in the years ended December 31, 1998, 1999
         and 2000, respectively.

                  Included in prepaid expenses and other assets are amounts
         receivable from related parties which total $10,123 and $18,653 for the
         years ended December 31, 1999 and 2000, respectively.

                  Included in accrued expenses are amounts payable to related
         parties which total $3,079 and $1,632 for the years ended December 31,
         1999 and 2000, respectively.

6.       REGULATORY AND LEGAL 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 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


                                     FS-10
<PAGE>   45
         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.

                  On August 18, 2000, the Company, through its membership in the
         Alabama Cable Telecommunications Association, joined other Alabama
         cable operators in a pole attachment Complaint against Alabama Power
         Company ("APC") which was filed with the FCC's Cable Service Bureau
         (the "Bureau"). The complaint was initiated as a result of APC's
         imposition of significant pole rental rate increases (more than 500%
         for the Company), APC's refusal to engage in good faith negotiations
         and the threat, by APC, to terminate existing pole attachment
         agreements. The Bureau granted the Alabama cable operators, including
         the Company, all relief requested in the Complaint. Specifically, the
         Bureau ruled that APC had failed to make a persuasive argument on the
         merits that lawful just compensation was greater than the current rate
         paid by the cable operators, including the Company, under existing pole
         attachment agreements. Thus, the Bureau declared APC's new pole
         attachment rental rates of $38.81 void and reinstated the $7.47 rate
         previously in effect, as well as other terms and conditions that APC
         had sought to terminate. The Bureau also placed the parties under a
         bargaining order requiring good faith negotiation of a new pole
         attachment agreement and a new rental rate utilizing the FCC's
         established formulas.

                  As expected, on September 11, 2000, APC appealed the Bureau's
         decision to the FCC's five Commissioner panel. This panel is expected
         to give a final decision in the Spring of 2001. In addition, on
         September 12, 2000, APC appealed the decision directly to the U.S.
         Court of Appeals for the Eleventh Circuit, which has agreed to hear the
         case. Briefs are expected to be due during the Spring of 2001 and,
         thus, no decision will be forthcoming until later in the year.


                                     FS-11
<PAGE>   46
                  It is also important to note that APC is not the only utility
         company to propose significant pole attachment rental rate increases.
         For instance, Georgia Power Company, which also provides pole
         attachments to the Company, has proposed an even greater increase than
         APC, as well as an onerous new pole agreement. Both the rates and the
         agreement are currently being challenged at the FCC, although the
         Company is not involved as they are with the APC proceedings. Depending
         on the final outcome of these proceedings, as well as others that may
         arise in the future involving other utility companies, the Company
         could experience a significant increase in its pole attachment rental
         costs and the results of its operations could be negatively impacted if
         enough of its pole attachment rental rates increased at this pace.

         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.

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. ("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
         year ended December 31, 1998 as if the acquisition of Fannon had
         occurred on January 1, 1998 (unaudited):


                                     FS-12
<PAGE>   47
<TABLE>
<CAPTION>
                                                            1998
                                                       --------------
                                                        (in thousands)
<S>                                                    <C>
Revenues                                               $       39,447

Loss before Extraordinary Item                                 (3,134)

Net loss                                                       (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,
         1998, nor does it purport to represent the results of the Company for
         future periods.

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
10.      SUBSEQUENT EVENTS

                  During the period from December 31, 2000 to March 2, 2001, the
         Company was in default of a debt to EBITDA ratio covenant under its
         credit facility. During the period from February 15, 2001 to March 2,
         2001, the Company was also in default of its obligation to pay interest
         on its 10-3/4% Series B Senior Notes due 2004. On March 2, 2001, the
         Company amended and restated its secured credit facility with four new
         lenders which will permit it to borrow up to $30 million due to
         certain covenant modifications (see Note 3 and Exhibit (4)(b) of the
         form 10-K). Approximately $18 million of the available credit was then
         drawn down to pay accrued interest on the Company's Series B Senior
         Notes and to purchase $12 million (face amount) of those Notes from
         affiliates of the lenders. The remaining credit available may be used,
         among other things, to (i) provide for working capital and general
         partnership purposes, (ii) make acquisitions of cable television
         systems, (iii) pay future installments of interest on the Company's
         Series B Senior Notes, and (iv) to finance capital improvements.

11.      QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

                  The following is a condensed summary of the Company's
         unaudited quarterly results of operations for the years ended December
         31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                              Year Ended December 31, 2000
                                                               First        Second         Third        Fourth         Total
                                                             --------      --------      --------      --------      --------
                                                                                (in millions of dollars)
<S>                                                          <C>           <C>           <C>           <C>           <C>
Revenues                                                     $  9,415      $  9,522      $  9,407      $  9,549      $ 37,893
System operating expenses (excluding
   depreciation and amortization)                               5,394         5,416         5,521         5,680        22,011
Net loss                                                       (1,473)       (1,447)       (1,856)       (1,962)       (6,738)
</TABLE>


<TABLE>
<CAPTION>
                                                                           Year Ended December 31, 1999
                                                              First      Second        Third       Fourth        Total
                                                             -------     -------      -------      -------      -------
                                                                              (in millions of dollars)
<S>                                                          <C>         <C>          <C>          <C>          <C>
Revenues                                                     $ 9,811     $ 9,126      $ 9,144      $ 9,291      $37,372
System operating expenses (excluding
   depreciation and amortization)                              5,186       4,997        5,042        5,220       20,445
Net income (loss)                                             14,888      (1,177)      (1,239)      (2,172)      10,300
</TABLE>

First quarter 1999 net income included gains on sales of cable systems of $15.9
million (see Note 8).


                                     FS-14
<PAGE>   49
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, 1999 and 2000. 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 auditing standards generally accepted
in the United States of America. 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, 1999 and
2000 in conformity with accounting principles generally accepted in the United
States of America.


/s/ Deloitte & Touche LLP

March 2, 2001
Detroit, Michigan


                                     FS-15
<PAGE>   50
                            JAMES CABLE FINANCE CORP.
            (A wholly owned subsidiary of James Cable Partners, L.P.,
                         a Delaware Limited Partnership)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                            DECEMBER 31,
                                                                                                           1999     2000
                                                                                                          ------   ------
<S>                                                                                                       <C>      <C>
                                     ASSETS
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-16
<PAGE>   51
                            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, 2000, a Statement of Operations, a Statement of
Shareholder's Equity and a Statement of Cash Flows have not been presented.


                                    FS - 17
<PAGE>   52
                           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 27, 2001

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.

Signature                Title                                    Date
---------                -----                                    ----
                         Person performing functions similar to
/s/ William R. James     a director and a principal executive     March 27, 2001
---------------------    officer
William R. James

                         Person performing functions similar to   March 27, 2001
/s/ Daniel K. Shoemaker  a director, a principal financial
-----------------------  officer, and a principal accounting
Daniel K. Shoemaker      officer


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>   53
                            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 27, 2001

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.

Signature                 Title                                  Date
---------                 -----                                  ----
                          Director; President (principal         March 27, 2001
/s/ William R. James      executive officer)
---------------------
William R. James

/s/ Daniel K. Shoemaker   Director; Treasurer (principal         March 27, 2001
-----------------------   financial officer and principal
Daniel K. Shoemaker       accounting officer)


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>   54
                                  EXHIBIT INDEX


    EXHIBIT NUMBER      EXHIBIT DESCRIPTION

    (3)(a)/(10)(a)      Second Amended and Restated Agreement of Limited
                        Partnership of James Cable Partners, L.P. dated as of
                        December 29, 1999, as amended by a First Amendment to
                        Second Amended and Restated Agreement of Limited
                        Partnership dated as of March 1, 2001.

    (4)(b)              Credit Agreement dated as of March 2, 2001 between James
                        Cable Partners, L.P., as Borrower, and the Lenders
                        listed therein.

    (4)(c)              Company Security Agreement dated as of March 2, 2001
                        between James Cable Partners, L.P., as Grantor, and
                        GoldenTree Asset Management LLC, as agent for the
                        Lenders.

    (4)(d)              Guaranty Agreement dated as of March 2, 2001 by James
                        Cable Finance Corp., in favor of each of the Lenders.

    (4)(e)              Guarantor Security Agreement dated March 2, 2001 between
                        James Cable Finance Corp., as Grantor, and GoldenTree
                        Asset Management LLC, as agent for the Lenders.

    12                  Statement re computation of ratios

    24                  Powers of Attorney


                                      -37-