The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates include useful lives of property, plant and equipment, valuation of long-lived assets and allocated operating costs. Actual results could differ from those estimates.

On April 10, 2002, pursuant to an asset purchase agreement dated August 29, 2001, the Partnership completed the sale of all of its Illinois cable television systems in and around Cisne, Farmersville, Flora, Noble, Raymond, Salem and Xena, Illinois to Rifkin Acquisition Partners, LLC and Charter Communications Entertainment I, LLC, each an affiliate of Enstar Communications Corporation (ECC), the Corporate General Partner and a direct subsidiary of Charter Communications Holding Company, LLC (Charter), for a total sale price of approximately $12,035,000 (the Charter Sale). As a pre-condition to the sale, based on approval by the limited partners, the partnership agreement was amended to allow the sale of assets to an affiliate of the Corporate General Partner.

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long- Lived Assets," adopted by the Partnership on January 1, 2002, the assets sold in the Charter Sale have been reclassified and presented as assets related to discontinued operations in the accompanying condensed balance sheets. The operating results and gain on sale of such cable systems are presented as discontinued operations in the accompanying condensed statements of operations. Discontinued operations classification was triggered in the second quarter of 2002 once approval of the sale was obtained and the sale became probable. For the period from January 1, 2002 to April 10, 2002 and the nine months ended September 30, 2001, revenues of the sold cable systems were $624,300 and $1,739,400, respectively, and income from discontinued operations, excluding the gain on sale of cable systems, totaled $48,700 and $233,300, respectively. For the three months ended September 30, 2001, revenue and income from discontinued operations approximated $573,400 and $48,100, respectively. The book value of investment in the sold cable systems approximated $4,580,700 at April 10, 2002. The Partnership recorded a gain of $7,454,300 in the nine months ended September 30, 2002 in connection with the Charter Sale.

On November 8, 2002 the Partnership entered into an asset purchase agreement providing for the sale of its Dyer, Tennessee cable system to Telecommunications Management, LLC (Telecommunications Management) for a total sale price of approximately $1,524,400 (approximately $825 per customer acquired). This sale is a part of a larger transaction in which the Partnership and nine other affiliated partnerships (which, together with the Partnership are collectively referred to as the "Selling Partnerships") would sell all of their remaining assets used in the operation of their respective cable systems to Telecommunications Management for a total cash sale price of approximately $15,341,600 (the Telecommunications Management Sale). The Telecommunications Management Sale is subject to the approval of a majority of the holders of the Partnership's units and approval of the holders of the other Selling Partnerships. In addition, the transaction is subject to certain closing conditions, including regulatory and franchise approvals. If approved, it is expected that this sale will close in the first half of 2003, although no assurance can be given regarding this matter.

Upon sale of the remaining cable system, the Partnership will be liquidated and all remaining assets will be distributed to the Limited Partners and the General Partners.

The Partnership has a management and service agreement (the Management Agreement) with Enstar Cable Corporation (Enstar Cable), a wholly owned subsidiary of ECC, for a monthly management fee of 5% of gross revenues, as defined, from operations of the Partnership, excluding revenues from the sale of cable television systems or franchises, payable to Enstar Cable. Management fee expense approximated $10,200 and $39,600 ($10,200 and $10,900 related to continuing operations) for the three months ended September 30, 2002 and 2001, respectively, and $62,000 and $120,900 ($30,800 and $33,900 related to continuing operations) for the nine months ended September 30, 2002 and 2001, respectively.

In addition to the monthly management fee, the Partnership reimburses Enstar Cable for direct expenses incurred on behalf of the Partnership, and for the Partnership's allocable share of operational costs associated with services provided by Enstar Cable. Additionally, Charter and its affiliates provide other management and operational services for the Partnership. These expenses are charged to the properties served based primarily on the Partnership's allocable share of operational costs associated with the services provided. The total amount charged to the Partnership for these services approximated $30,000 and $89,700 ($21,400 and $13,500 related to continuing operations) for the three months ended September 30, 2002 and 2001, respectively, and $154,200 and $265,300 ($56,500 and $49,100 related to continuing operations) for the nine months ended September 30, 2002 and 2001, respectively.

All programming services have been purchased through Charter. Charter charges the Partnership for these costs based on an allocation of its costs. The Partnership recorded programming fee expense of $43,000 and $156,600 ($43,300 and $44,400 related to continuing operations) for the three months ended September 30, 2002 and 2001, respectively, and $284,600 and $482,900 ($129,700 and $134,100 related to continuing operations) for the nine months ended September 30, 2002 and 2001, respectively. Programming fees are included in service costs in the accompanying condensed statements of operations.

All amounts owed to the General Partner and affiliates are non-interest bearing.

Net income per unit of limited partnership interest is based on the average number of units outstanding during the periods presented. For this purpose, net income (loss) excluding gain on sale of cable systems has been allocated 99% to the Limited Partners and 1% to the General Partners. Gain on sale of cable systems has been allocated in accordance with the partnership agreement, first to the Limited Partners and then to the General Partners to eliminate their negative equity balance on the date of sale, second to the General Partners in the amount of 1% of the Limited Partners' equity balance on the date of sale, and then in the amount of 99% to the Limited Partners and 1% to the General Partners. Gains and losses will be allocated in this manner until the Limited Partners have received an amount equal to their adjusted subscription amount and liquidation preference, as defined, and thereafter 80% to the Limited Partners and 20% to the General Partners. The General Partners do not own units of partnership interest in the Partnership, but rather hold a participation interest in the income, losses and distributions of the Partnership.

Distributions have been allocated in accordance with the partnership agreement, 99% to the Limited Partners and 1% to the General Partners. Distributions will be allocated in this manner until the Limited Partners have received an amount equal to their adjusted subscription amount and liquidation preference, as defined, and thereafter 80% to the Limited Partners and 20% to the General Partners.

The Partnership was party to a loan agreement with Enstar Finance Company, LLC, a subsidiary of ECC. The loan agreement provided for a revolving loan facility of $3,600,000 and matured and the outstanding balance repaid on August 31, 2001. The loan facility was not extended or replaced. The Partnership signed a loan agreement in the amount of $250,000 with Falcon Cable Communications, LLC, an affiliate of the Partnership, for general working capital purposes. The loan matured on May 31, 2002 and was repaid rather than extended or replaced.

This report includes certain forward-looking statements regarding, among other things, our future results of operations, regulatory requirements, competition, capital needs and general business conditions applicable to us. Such forward-looking statements involve risks and uncertainties including, without limitation, the uncertainty of legislative and regulatory changes and the rapid developments in the competitive environment facing cable television operators such as us. In addition to the information provided here, reference is made to our Annual Report on Form 10-K for the year ended December 31, 2001, for additional information regarding such matters and the effect thereof on our business.

On April 10, 2002, we completed the sale of our Illinois cable television systems in and around Cisne, Farmersville, Flora, Noble, Raymond, Salem and Xena, Illinois. The following discussion of our results of operations classifies all results from operations sold as discontinued operations for the three and nine months ended September 30, 2002 and 2001. Accordingly, the remaining discussion includes the results of operations for the Dyer system only.

Service costs increased $1,400 from $67,100 to $68,500 or 2.1%, and decreased $15,300 from $234,900 to $219,600, or 6.5%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. Service costs increased for the three months ended September 30, 2002 primarily as a result of an increase in copyright expense. Service costs decreased for the nine months ended September 30, 2002 primarily as a result of a decrease in personnel costs. Service costs represent programming costs and other costs directly attributable to providing cable services to customers.

General and administrative expenses decreased $50,500 from $79,600 to $29,100, or 63.4%, and $54,400 from $180,100 to $125,700, or 30.2%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease was primarily due to a decline in professional fees, bad debt expense and insurance costs.

General partner management fees and reimbursed expenses increased $7,200 from $24,400 to $31,600, or 29.5%, and $4,300 from $83,000 to $87,300, or 5.2%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The increase was primarily due to an increase in services provided by Charter on our behalf in replacing outside professionals resulting in a net reduction of expenses to the Partnership.

Depreciation and amortization expense decreased $37,900 from $106,000 to $68,100, or 35.8%, and $131,400 from $340,700 to $209,300, or 38.6%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease was primarily due to certain fixed assets becoming fully depreciated during the last half of 2001 and the first half of 2002, partially offset by an increase in capital expenditures.

Due to the factors described above, our operating income or loss changed $65,300 from a loss of $59,200 to income of $6,100 and decreased $135,100 from a loss of $160,700 to $25,600 for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001.

Interest income increased $16,800 from $4,200 to $21,000 and $40,900 from $8,300 to $49,200 for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The increase was primarily due to an increase in average cash balances available for investment resulting from the sale of certain cable systems (Charter Sale).

Interest expense decreased from $4,500 to $0 and $42,300 from $45,900 to $3,600 for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease was primarily due to the maturing of the loan facility on August 31, 2001 and maturing of the related party loan agreement on May 31, 2002.

Other expense of $9,100 and $67,200 for the three and nine months ended September 30, 2001, respectively, represents costs associated with a previous unexecuted sales proposal.

Due to the factors described above, our income from continuing operations increased $95,700 from a loss of $68,600 to income of $27,100, and $285,500 from a loss of $265,500 to income of $20,000, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001.

Income or loss from discontinued operations represents the operating results of the cable systems that were sold. Income or loss from discontinued operations decreased $50,300 from income of $48,100 to a loss of $2,200, and our income decreased $184,600 from $233,300 to $48,700 for the three months and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. Loss from discontinued operations for the three months ended September 30, 2002, represents adjustments to accruals of the system sold based on the receipt of final invoices and information. Gain or loss on sale of cable systems totaled a loss of $7,900 and a gain of $7,454,300 for the three and nine months ended September 30, 2002, respectively. Gain or loss on sale of cable systems represents the difference between the sale proceeds and the net book value of investment in the sold cable systems. The additional loss on sale of cable systems in the three months ended September 30, 2002 resulted from revisions to estimates of taxes due as a result of the sale of cable systems.

Net income increased $37,500 from a loss of $20,500 to income of $17,000 and $7,555,200 from a loss of $32,200 to income of $7,523,000 for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001, due to the factors described above.

Our primary objective, having invested net offering proceeds in cable television systems, is to distribute to our partners all available cash from the sale of cable systems and all cash flow, if any, from operations after providing for expenses and any planned capital requirements relating to the expansion, improvement and upgrade of our remaining cable systems.

Operating activities provided cash of $533,500 and $1,008,700 in the nine months ended September 30, 2002 and 2001, respectively. Changes in receivables, prepaid expenses and other assets provided cash of $96,800 and $89,300 in the first nine months of 2002 and 2001, respectively, due to differences in the timing of receivable collections and the payment of prepaid expenses. Changes in liabilities owed to affiliates and third party creditors used cash of $21,500 and provided cash of $181,100 during the nine months ended September 30, 2002 and 2001, respectively, due to differences in the timing of payments.

Investing activities provided $11,538,100 and used $177,000 during the nine months ended September 30, 2002 and 2001, respectively, primarily due to the Charter Sale in 2002 and capital expenditures for our cable systems in both periods. Capital expenditures increased from 2001 due to upgrades to the cable system necessary to maintain compliance with franchise agreements.

Financing activities used $9,038,000 during the nine months ended September 30, 2002 primarily due to distributions to partners of proceeds received from the Charter Sale coupled with the repayments of our note payable to affiliate. Financing activities used $450,000 during the nine months ended September 30, 2001, primarily due to the repayment of debt in 2001.

INVESTING ACTIVITIES

Significant capital would be required for a comprehensive plant and headend upgrade, particularly in light of the high cost of electronics to activate two-way service, to offer high speed cable modem Internet and other interactive services, as well as to increase channel capacity and allow a greater variety of video services. Our capital expenditures for recent upgrades have been made with available funds, and have enhanced the economic value of our systems.

The estimated cost of these upgrades for our Dyer, Tennesse system would be approximately $2.2 million (for an upgrade to 550 megahertz capacity) and $2.6 million (for an upgrade to 870 megahertz capacity). Given the high cost of such a comprehensive upgrade effort, the limited funds available to us, and the belief that a comprehensive plan is not economically prudent, the Corporate General Partner does not presently anticipate that it will proceed with a comprehensive upgrade plan. Provided there are available funds, the Corporate General Partner will, however, continue to evaluate alternative, cost- effective solutions to increase channel capacity, pay-per-view services, and digital services which would enhance the value of our system, maintain compliance with franchise agreements and be economically prudent.

Distributions to partners as a result of the Charter Sale totaled $8,788,000 for the nine months ended September 30, 2002.

We were party to a loan agreement with Enstar Finance Company, LLC, a subsidiary of the Corporate General Partner. The loan agreement provided for a revolving loan facility of $3,600,000 and matured on August 31, 2001. The loan facility was not extended or replaced. We signed a loan agreement in the amount of $250,000 with Falcon Cable Communications, LLC, our affiliate, for general working capital purposes. The loan matured on May 31, 2002 and was repaid rather than extended or replaced.

On April 10, 2002, pursuant to an asset purchase agreement dated August 29, 2001, we completed the sale of all of our Illinois cable television systems in and around Cisne, Farmersville, Flora, Noble, Raymond, Salem and Xena, Illinois to Rifkin Acquisition Partners, LLC and Charter Communications Entertainment I, LLC, each an affiliate the Corporate General Partner and an indirect subsidiary of Charter for a total sale price of approximately $12,035,000 (the Charter Sale). As a pre-condition to the sale, based on approval by the limited partners, our partnership agreement was amended to allow the sale of assets to an affiliate of the Corporate General Partner.

After setting aside $1,000,000 to fund the Dyer headend's working capital needs for the foreseeable future, and paying or providing for the payment of the expenses of the Charter Sale, the Corporate General Partner will make one or more distributions of our allocable share of the remaining net sale proceeds, in accordance with our partnership agreement. We made an initial distribution payment of approximately $7,175,600 on or about May 15, 2002, with a second distribution of $1,612,400 made on or about September 24, 2002.

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long- Lived Assets," adopted by the Partnership on January 1, 2002, the assets sold in the Charter Sale have been reclassified and presented as assets related to discontinued operations in the accompanying condensed balance sheets. The operating results and gain on sale of such cable systems are presented as discontinued operations in the accompanying condensed statements of operations. Discontinued operations classification was triggered in the second quarter of 2002 once approval of the sale was obtained and the sale became probable. For the period from January 1, 2002 to April 10, 2002 and the nine months ended September 30, 2001, revenues of the sold cable systems were $624,300 and $1,739,400, respectively, and income from discontinued operations, excluding the gain on sale of cable systems, totaled $48,700 and $233,300, respectively. For the three months ended September 30, 2001, revenue and income from discontinued operations approximated $573,400 and $48,100, respectively. The book value of investment in the sold cable systems approximated $4,580,700 at April 10, 2002. The Partnership recorded a gain of $7,454,300 in the nine months ended September 30, 2002 in connection with the Charter Sale.

On November 8, 2002 the Partnership entered into an asset purchase agreement providing for the sale of its Dyer, Tennessee cable system to Telecommunications Management, LLC (Telecommunications Management) for a total sale price of approximately $1,524,400 (approximately $825 per customer acquired). This sale is a part of a larger transaction in which the Partnership and nine other affiliated partnerships (which, together with the Partnership are collectively referred to as the "Selling Partnerships") would sell all of their remaining assets used in the operation of their respective cable systems to Telecommunications Management for a total cash sale price of approximately $15,341,600 (the Telecommunications Management Sale). The Telecommunications Management Sale is subject to the approval of a majority of the holders of the Partnership's units and approval of the holders of the other Selling Partnerships. In addition, the transaction is subject to certain closing conditions, including regulatory and franchise approvals. If approved, it is expected that this sale will close in the first half of 2003, although no assurance can be given regarding this matter.

Upon sale of the remaining cable system, the Partnership will be liquidated and all remaining assets will be distributed to the Limited Partners and the General Partners.

CERTAIN TRENDS AND UNCERTAINTIES

Insurance coverage is maintained for all of the cable television properties owned or managed by Charter to cover damage to cable distribution systems, customer connections and against business interruptions resulting from such damage. This coverage is subject to a significant annual deductible which applies to all of the cable television properties owned or managed by Charter, including ours.

Our customers are served by our system in Dyer, Tennessee and neighboring communities. Significant damage to the system due to seasonal weather conditions or other events could have a material adverse effect on our liquidity and cash flow. We continue to maintain insurance coverage in amounts our management views as appropriate for all other property, liability, automobile, workers' compensation and other insurable risks.

Charter and our Corporate General Partner have had communications and correspondence with representatives of certain limited partners, and others, concerning certain Enstar partnerships of which our Corporate General Partner is also the Corporate General Partner. While we are not aware of any formal litigation which has been filed relating to the communications and correspondence, or the subject matter referred to therein, it is impossible to predict what actions may be taken in the future or what loss contingencies may result therefrom.

It is difficult to assess the impact that the general economic slowdown will have on future operations. This could result in reduced spending by customers and advertisers, which could reduce our revenues and operating cash flow, as well as the collectibility of accounts receivable.

Certain of our expenses, such as those for wages and benefits, equipment repair and replacement, and billing and marketing generally increase with inflation. However, we do not believe that our financial results have been, or will be, adversely affected by inflation in a material manner, provided that we are able to increase our service prices periodically, of which there can be no assurance.