10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2002

Commission file number 0-26677

Insight Communications Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware	13-4053502
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
810 Seventh Avenue New York, New York 10019
(Address of principal executive offices)

Registrant’s telephone number, including area code: (917) 286-2300

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

Securities registered pursuant to Section 12(g) of the Act:

Class A Common Stock, $.01 Par Value

(Title of class)

          Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   x No   o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes   x No   o

          The aggregate market value of the common equity held by non-affiliates of the registrant as of June 28, 2002 was approximately $526.7 million.

          The number of shares of the registrant’s common stock outstanding as of February 28, 2003: 50,704,390 shares of Class A Common Stock and 9,354,468 shares of Class B Common Stock.

Documents Incorporated by Reference:

          Portions of the registrant’s proxy statement for the 2003 Annual Meeting of Stockholders are incorporated by reference into Part III.

Table of Contents

		Page
	PART I
Item 1.	Business	1
Item 2.	Properties	31
Item 3.	Legal Proceedings	32
Item 4.	Submission of Matters to a Vote of Security Holders	33
Item 4A.	Executive Officers of the Registrant	33
	PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	35
Item 6.	Selected Financial Data	35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8.	Financial Statements and Supplementary Data	58
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	58
	PART III
Item 10.	Directors and Executive Officers of the Registrant	59
Item 11.	Executive Compensation	59
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	59
Item 13.	Certain Relationships and Related Transactions	59
Item 14.	Controls and Procedures	59
	PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	60
SIGNATURES		64

ii

FORWARD-LOOKING STATEMENTS

          Some of the information in this report contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they:

• discuss our future expectations;

• contain projections of our future results of operations or of our financial condition; or

• state other “forward-looking” information.

          We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors listed in this report, as well as any other cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Examples of these risks include our history and expectation of future net losses, our substantial debt, changes in laws and regulations, increasing programming costs and competition.  You should be aware that the occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, operating results and financial condition.

iii

PART I

Item 1.  Business

          In this report, we rely on and refer to information and statistics regarding the cable television industry and our market share in the sectors in which we compete.  We obtained this information and statistics from various third-party sources, discussions with our customers and our own internal estimates.  We believe that these sources and estimates are reliable, but we have not independently verified them and cannot guarantee their accuracy or completeness.

General

          We are the ninth largest cable television system operator in the United States based on customers served.  We currently serve approximately 1.4 million customers, all of which are concentrated in the four contiguous states of Indiana, Kentucky, Illinois and Ohio. In addition to its geographic concentration, our communications network is tightly-grouped, or “clustered,” with approximately 95% of our customers served from fourteen headends after giving effect to the remaining network upgrades of our Illinois systems expected to be substantially completed by mid-2003.  As a result, the amount of capital necessary to deploy new and enhanced products and services is significantly reduced on a per home basis because of the large number of customers served by a single headend. A headend processes signals received for distribution to customers over our network.  Clustering enables us to efficiently deploy a bundled suite of entertainment, information and communications services. This combination of geographic concentration and clustering has enabled us to offer, under the Insight Digital brand, a complete bundle of interactive digital video, high-speed data access and telephone services. We are a public company and our Class A common stock is listed on The Nasdaq National Market under the symbol “ICCI.” Our experienced senior management team and members of their families own, in the aggregate, over 15% of our common stock.

          Insight Midwest, L.P. is a partnership owned 50% by us and 50% by an indirect subsidiary of Comcast Cable Holdings, LLC (formerly known as AT&T Broadband, LLC), which is a subsidiary of Comcast Corporation.  Insight Midwest owns systems serving approximately 1.3 million of our customers. On November 18, 2002, Comcast Corporation acquired the broadband business of AT&T Corp., and presently is the largest cable television system operator in the United States.  The transaction did not result in any direct change in Insight Midwest’s ownership structure, and we continue to serve as the general partner of Insight Midwest and as the manager of all of Insight Midwest’s systems, and the Comcast Cable subsidiary serves as Insight Midwest’s limited partner.  Our 50% interest in Insight Midwest constitutes substantially all of our operating assets.  We also manage additional systems in Indiana and Kentucky owned by an affiliate of Comcast Cable, which served approximately 114,600 customers as of December 31, 2002, for which we receive a management fee equal to 5% of the gross revenues of those systems.

          As a result of our upgrade efforts, as of December  31, 2002 , we estimate that 92% of our customers  were passed by our upgraded network, which enables delivery of an advanced suite of entertainment, information and communications services.

          We are the largest operator of cable television systems in the State of Indiana. As of December 31, 2002, the Indiana systems passed approximately 569,200 homes and served approximately 326,000 customers. The Indiana systems are located primarily in the university cities of Bloomington, Evansville and Lafayette and demographically desirable areas of suburban Indianapolis. Approximately 95%of the Indiana systems’ customers are served by three headends.

1

          We are also the largest operator of cable television systems in the State of Kentucky. As of December 31, 2002, the Kentucky systems passed approximately 783,100 homes and served approximately 449,100 customers.  Our Kentucky systems are located in four of the five largest cities in the state: Louisville, Lexington, Covington and Bowling Green.  Approximately 99% of Insight Kentucky’s customers are served by four headends.

          As of December 31, 2002, the systems we manage for an affiliate of Comcast Cable passed approximately 197,600 homes and served approximately 114,600 customers.  These managed systems are located adjacent to our existing Indiana and Kentucky systems, and are operated by the employees of our existing systems.  On February 28, 2003, we exchanged with an affiliate of Comcast Cable the system we owned in Griffin, Georgia serving approximately 11,800 customers, plus $25 million, for certain of these managed systems serving approximately 23,400 customers which are presently tied into our Louisville system.  The management arrangement for the remaining managed systems expires on June 30, 2003.

          We are the second largest operator of cable television systems in the State of Illinois.  As of December 31, 2002, our Illinois systems passed approximately 687,800 homes and served approximately 413,700 customers.  The Illinois systems are located primarily in mid-sized communities, including Springfield, Rockford, Peoria and Champaign/Urbana. Upon completion of our consolidation of headends, approximately 95% of the Illinois systems’ customers will be served by six headends. The network upgrades and consolidation of headends are expected to be substantially completed during the first half of 2003.

          As of December 31, 2002, our Ohio system passed approximately 198,700 homes and served approximately 88,100 customers in the eastern portion of the City of Columbus and the surrounding suburban communities. All of the Ohio system’s customers are served from a single headend. Approximately 91% of the Ohio system’s customers are served by a network upgraded to 870 MHz capacity, and our upgrade efforts are continuing.

          Recognizing the opportunities presented by newly available products and services, the strength of our market characteristics and favorable changes in the regulatory environment, we deployed a strategy to become a competitive, full service provider of entertainment, information and communications services for the communities served by our networks. We intend to continue capitalizing on our highly clustered cable television systems and to economically upgrade the technological capabilities of our broadband networks in order to deploy enhanced new services.

          We believe that an integrated package of existing multi-channel video, new and enhanced products and services, such as interactive digital video, including video-on-demand or near video-on-demand, high-speed Internet access and telephone services, coupled with our commitment to locally focused customer service enhances our ability to acquire and retain customers in a competitive environment while increasing revenues per customer.  We believe that the highly clustered nature of our systems also enables us to more efficiently deploy our marketing dollars and maximizes our ability to enhance customer awareness, increase use of our products and services and build brand support.  In addition to our broad product offerings, we also  emphasize a high level of locally-focused content and customer service.  To augment our growth, we will continue to seek strategic acquisitions that fit our clustering and operating strategy.

          We have long-term agreements with Comcast Cable to facilitate the delivery of local telephone services.  Under the terms of these agreements, we lease for a fee certain capacity on our network to Comcast Cable.  We also provide certain services and support for which we receive additional payments.  The capital required to deploy telephone services is shared, with Comcast Cable responsible for switching

2

and transport facilities.

          This report, our quarterly reports on Form 10-Q, our current reports on Form 8-K, as well as any other materials that we file with or furnish to the Securities and Exchange Commission are available free of charge through our website www.insight-com.com as soon as reasonably practicable after such material is electronically filed or furnished.

          Our principal offices are located at 810 Seventh Avenue, New York, New York 10019, and our telephone number is (917) 286-2300.

Strategy

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

     Focus on operating large, tightly-grouped clusters of cable systems with attractive technical and demographic profiles

          We operate large, tightly-grouped clusters of cable systems, most of which have attractive technical and demographic profiles. Our systems are characterized by high housing densities and high ratios of customers to headends. As a result, the amount of capital necessary to deploy new and enhanced products and services is significantly reduced on a per home basis because of the large number of customers served by a single headend. We believe that the highly clustered nature of our systems enables us to more efficiently deploy our marketing dollars and maximize our ability to enhance customer awareness, increase use of our products and services and build brand support. Furthermore, our clustered systems, across 95% of our customers, providing for headends serving an average of 93,000 customers upon completion of our planned network upgrades, allow us to be capital efficient as we invest in necessary technology. Our demographic profile is characterized by good housing growth and low unemployment in growing communities, many of which are centered around large universities and/or major commercial enterprises. We believe that households with our demographic profile are more likely to subscribe to these new and enhanced products and services than the national average demographic profile.

     Expeditiously upgrade our network

          We are upgrading our network expeditiously in order to provide new and enhanced products and services, increase the programming and communications choices for our customers, improve our competitive position and increase overall customer satisfaction. We are in the process of upgrading almost all of our network to provide at least 750 MHz capacity, or “bandwidth,” and two-way active capability with an average of 700 homes per fiber node, which can be further subdivided if necessary. Nodes are the point of interface between our headends and our network. The result will be a significant increase in network capacity, quality and reliability which facilitates the delivery of new and enhanced products and services and reduced operating costs. Our aggressive investment in our broadband cable network upgrade allows us to expeditiously offer these services to substantially all of our customers.

     Introduce new and enhanced products and services, including interactive Insight Digital service, high-speed data service and telephone service

          Our marketing strategy is to offer our customers an array of entertainment, information and communications services on a bundled basis. By bundling our products and services, we provide our

3

customers with an increased choice of services in value-added packages, which we believe results in higher customer satisfaction, increased use of our services and greater customer retention. We have conducted research and held numerous focus group sessions in our local markets, which lead us to believe that these services have high customer appeal. We expect that our ability to provide bundled services will provide us with a strong competitive advantage over alternative video providers, such as direct broadcast satellite television systems, and incumbent telephone companies. To accelerate the deployment of these services, we have entered into arrangements and technical initiatives with several industry leaders, including: (1) AT&T Broadband (now known as Comcast Cable) to provide telephone services; (2) AT&T Corp. and RoadRunner to provide certain high-speed data services; (3) SeaChange International, Inc. to provide video-on-demand; (4) Liberate Technologies to utilize its software platform for the deployment of interactive television services; and (5) SourceSuite LLC to provide an interactive program guide as well as local information and community guides.

     Leverage strong local presence to enhance customer and community relations

          Excellent customer service is a key element of our strategy. We are dedicated to quality customer service and seek a high level of customer satisfaction by employing localized customer care, extensively using market research and providing customers with an attractively priced product offering. A significant number of our customers visit their local office on a monthly basis providing us the opportunity to demonstrate and sell our new and enhanced products and services. Our localized customer care initiatives create substantial marketing and promotion opportunities, which we believe are effective in the deployment of interactive, digital and high-speed data products. We believe that we achieve customer satisfaction levels that are substantially above industry averages. Annually, we commission Peter D. Hart Research Associates to survey our customers with respect to service and product knowledge. Based upon our most recent survey conducted in November 2002, our customers continue to be highly satisfied with our service.

          In addition, we are dedicated to fostering strong relations in the communities we serve. We sponsor local charities and community causes through staged events and promotional campaigns, including the industry’s Cable in the Classroom program. Our emphasis on customer service and strong community involvement has led to higher customer satisfaction, reduced customer churn and excellent franchise relationships. To further strengthen community relations and differentiate us from direct broadcast satellite television systems and other multichannel video providers, we provide locally produced and oriented programming that offers, among other things, community information, local government proceedings and local specialty interest shows. In some of our markets, we are the only broadcaster of local college and high school sporting events, which allows us to provide important programming that builds customer loyalty.

     Pursue value-enhancing transactions in nearby or adjacent geographies

          To support our strategy, we intend to pursue value-enhancing transactions. To augment our internal customer growth, we will seek to swap or acquire systems that strategically fit our clustering and operating strategy. We do not currently have any agreements, commitments or understandings for any future acquisitions. There is no assurance that any additional acquisitions will be completed. We believe that by acquiring or swapping systems in close proximity we can improve revenue growth and operating margins. This is achieved through the consolidation of headends and spread of fixed costs over larger systems and the increase of operating efficiencies associated with larger systems.

Technical Overview

          We believe that in order to achieve consistently high levels of customer service, reduce

4

operating costs, maintain a strong competitive position and deploy important new technologies, we will need to install and maintain a state-of-the-art technical platform. The deployment of fiber optic cable which has a capacity for a very large number of channels, an increase in the bandwidth to 750 MHz or higher, the activation of a two-way communications network and the installation of digital equipment will allow us to deliver new and enhanced products and services, including interactive digital video, high-speed data services and telephone services provided by Comcast Cable.

          As of December 31, 2002, our owned systems were comprised of approximately 28,300 miles of network serving approximately 1.3 million customers and passing approximately 2.3 million homes resulting in a density of approximately 80 homes per mile. As of that date, our owned systems were made up of an aggregate of 45 headends. We intend to continue our strategy of consolidating headends by eliminating approximately 32 headends, at which point 95% of our customers will be served by fourteen headends.  As of December 31, 2002, we estimate that  92% of our customers were passed by our upgraded network. After completion of our planned network upgrades, approximately 97% of our customers will be served by a network that is two-way active and 750 MHz.

          Our network design calls for an analog and digital two-way active network with fiber optic cable carrying signals from the headend to the distribution point within our customers’ neighborhoods. The signals are transferred to our coaxial cable network at the node for delivery to our customers. We have designed the fiber system to be capable of subdividing the nodes if traffic on the network requires additional capacity.

          We believe that active use of fiber optic technology as a supplement to coaxial cable plays a major role in expanding channel capacity and improving the performance of our systems. Fiber optic strands are capable of carrying hundreds of video, data and voice channels over extended distances without the extensive signal amplification typically required for coaxial cable. We will continue to deploy fiber optic cable to further reduce amplifier cascades while improving picture quality and system reliability.

          A direct result of this extensive use of fiber optics is an improvement in picture quality and a reduction of outages because system failures will be both significantly reduced and will impact far fewer customers when they do occur. Our design allows our systems to have the capability to run multiple separate channel line-ups from a single headend and to insert targeted advertisements into specific neighborhoods.

          To enable us to deliver telephone services, Comcast Cable is required to install and maintain the necessary switching and transport facilities. Insight Midwest is required to deploy the necessary equipment at the headends and at customers’ homes, and is responsible for expanding and upgrading our network to provide the required capacity. We are increasing the reliability of the services by implementing centralized powering and status monitoring on our networks as telephone services are deployed in our systems. Centralized power provides the reliability, including lifeline reliability, required in delivering telephone services. The existing commercial power structure employed by cable networks is subject to the general power disruptions experienced by the local power utility. Centralized power will provide immediate battery back-up for a limited duration followed by unlimited gas-powered generator back-up. This reliability will not only benefit the delivery of telephone service, but also the reliability of the other products and services delivered over the network. Status monitoring will enable us to examine key components of our network so that we can diagnose problems before they become critical and interfere with the stability of our network.

5

Products and Services

     Traditional Cable Television Services

          We offer our customers a full array of traditional cable television services and programming offerings. We tailor both our basic line-up and our additional channel offerings to each regional system in response to demographics, programming preferences, competition and local regulation. We offer a basic level of service which includes up to 25 channels of television programming. As of December 31, 2002, approximately 91% of our customers chose to pay an additional amount to receive additional channels under our “Classic” or “expanded” service. Premium channels, which are offered individually or in packages of several channels, are optional add-ons to the basic service or the classic service. As of December 31, 2002, premium units as a percentage of basic subscribers was approximately 48%.

          Our analog cable television service offering includes the following:

• Basic Service. All of our customers receive the basic level of service, which generally consists of local broadcast television and local community programming, including government and public access, and may include a limited number of satellite channels.

• Classic Service or Expanded Service. This expanded level of service includes a group of satellite-delivered or non-broadcast channels such as ESPN, CNN, Discovery Channel and Lifetime.

• Premium Channels. These channels provide unedited, commercial-free movies, sports and other special event entertainment programming such as HBO, Cinemax, Starz! and Showtime. We offer subscriptions to these channels primarily either as a single channel analog service or as a multi-channel digital service.

• Pay-Per-View. These analog channels allow customers with addressable set top boxes to pay to view a single showing of a recently released movie or a one-time special sporting event or music concert on an unedited, commercial-free basis.

     New and Enhanced Products and Services

          As network upgrades have been activated, we deploy new and enhanced products and services in most of our markets, including interactive digital video and high-speed data services. In addition, we are offering telephone services to our customers in selected markets.

          Interactive Digital Video

          The implementation of interactive digital technology significantly enhances and expands the video and service offerings we provide to our customers. Most digital launches by other cable operators have been limited to simply offering more channels as a defensive move against competition from direct broadcast satellite television systems. Because of the significantly increased bandwidth and two-way transmission capability of our state-of-the-art technical platform, which continues to be built in conjunction with our digital launches, we have designed a more extensive digital product that is rich in program offerings and highly interactive with our customers. Our interactive digital service is designed to exploit the advantages of a broadband network in the existing generation of set-top devices. The digital service encompasses three interactive applications: (1) an interactive program guide; (2) interactive local information and community guides; and (3) a video-on-demand service.

6

          We have conducted numerous focus groups and commissioned research studies, the findings of which have helped to develop our interactive digital strategy. We believe that our digital penetration will continue to increase as a result of our differentiated services such as a graphically rich local information network and video-on-demand pay-per-view with full VCR functionality.

          We are packaging a “Digital Gateway” brand. For $7.95 per month, our customers receive the following services:

• A digital set-top box;

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

• A local, interactive Internet-style information and entertainment service;

• A multi-channel premium service for customers who separately subscribe to premium channels, such as HBO and Showtime;

• Video-on-demand;

• Mag Rack, a selection of video magazines with video-on-demand functionality; and

• A digital 40-channel audio music service.

          We have an agreement with Liberate Technologies that enables us to utilize the Liberate software platform for the deployment of interactive television services The Liberate software provides the middleware component of our interactive digital product. Throughout our systems, we have deployed Motorola’s DCT-2000 digital set-top boxes.  More recently, we have deployed the less expensive DCT-1700 set-top boxes, and for systems that have launched high definition television, we have deployed the DCT-5100.

          We have transitioned our digital customers from the video-on-demand service provided by DIVA Systems Corporation to a new video-on-demand infrastructure provided by SeaChange International, Inc. SeaChange provides a true video-on-demand service over the cable television infrastructure. Customers receive the movies electronically over the network and have full VCR functionality, including pause, play, fast forward and rewind. The movies are delivered with a high quality digital picture and digital sound. Our video-on-demand product is designed to provide movies at prices comparable to those charged for videotape rentals, pay-per-view and near video-on-demand movies, but with far greater convenience and functionality.  On May 29, 2002, DIVA filed for reorganization under Chapter 11 of the Bankruptcy Code.

          On March 14, 2002, we purchased the remaining 50% equity interest in SourceSuite LLC that we did not already own.  Through SourceSuite, our interactive digital platform provides its local Internet-style service and its interactive program guide.

          Upon the completion of the network upgrades of the Indiana, Kentucky and Illinois systems, we will continue to migrate the previous owners’ digital products to our interactive Insight Digital product. While the previous owners’ digital products were targeted to fill programming voids, our interactive Insight Digital service is designed to provide our customers with an Internet-style experience as well as enhanced programming choices, which have resulted in higher penetration and customer satisfaction and reduced churn.

7

     High-Speed Data

          We offer high-speed data service for personal computers for all of our upgraded systems through our own regional network branded Insightbb.com^SM, except for our Columbus, Ohio system, which utilizes the RoadRunner service. AT&T Corp. provides the IP network backbone for our Insightbb.com service and certain core Internet support functions.  This arrangement with AT&T replaces our previous Internet access provider Excite @ Home.  We transitioned our customers from the Excite @ Home network to our new regional network in mid-February 2002.  As of December 31, 2002, high-speed data services were made available in 2 million of our homes and served approximately 144,800 of our customers.

          The broad bandwidth of our cable network enables data to be transmitted significantly faster than traditional telephone-based modem technologies, and the cable connection does not interfere with normal telephone activity or usage. For example, cable’s on-line customers can download large files from the Internet in a fraction of the time it takes when using any widely available telephone modem technology. Moreover, surfing the Internet on a high-speed network removes the long delays for Web pages to fully appear on the computer screen, allowing the experience to more closely approximate the responsiveness of changing channels on a television set. In addition, the cable modem is always on and does not require the customer to dial into an Internet service provider and await authorization. We believe that these factors of speed and easy accessibility will increase the use and impact of the Internet. Although other high-speed alternatives are being developed to compete with cable, we believe that the cable platform currently is best able to deliver these services.

     Telephone Services

          We have a long-term agreement with  Comcast Cable that allows Insight Midwest to deliver local telephone service using Insight Midwest’s network infrastructure and  Comcast Cable’s switching and transport facilities. Insight Midwest leases certain capacity on its network to Comcast Cable for a monthly fee for each of the first four lines ordered by a customer. Additionally, Comcast Cable is required to pay Insight Midwest a fee for each customer installation. Insight Midwest is compensated on a per transaction basis for sales of Comcast Cable services as Comcast Cable’s agent. For Insight Midwest’s provision of billing and collection services, Comcast Cable is required to pay it a monthly fee per customer. Insight Midwest is also entitled to additional compensation if revenue exceeds the projected target revenue for local service lines and features, such as enhanced caller ID or voice mail.

          Comcast Cable is the regulated telephone carrier for the provision of telephone services. The Comcast Cable digital telephone services are marketed and carried as part of our bundle of Insight Digital services. Insight Midwest markets the services, as Comcast Cable’s agent, both on a stand-alone basis and bundled with our other products and services, such as interactive digital video and high-speed data access. Insight Midwest also bills customers for Comcast Cable’s services, as well as provides installation, maintenance and marketing support for Comcast Cable’s services. Pursuant to the agreement, the services are to be provided in the territories in which we currently provide cable television service, other than our Illinois systems. If both parties agree, the agreements can be expanded to include the Illinois systems.  Telephone services have been deployed in areas within Louisville, Kentucky, Evansville, Indiana, Lexington, Kentucky, and Columbus, Ohio and are available to a total of approximately 533,000 households, with approximately 30,600 active customers as of December 31, 2002.

          The capital required to deploy telephone services over our networks is a shared obligation. Insight Midwest is responsible for upgrading and maintaining our network to meet specified measures of quality, including increasing the capacity on our network to an average capacity of two lines per residential

8

household passed, assuming a specified service penetration rate. Insight Midwest also acquires and installs equipment to be located at the customer premises that is required to provide telephone services.  Comcast Cable is responsible for switching and transport facilities.

Business Background

          We were co-founded in 1985 as a limited partnership under the name Insight Communications Company, L.P. by Sidney R. Knafel and Michael S. Willner after a previous association with one another at Vision Cable Communications where Mr. Knafel was co-founder and Chairman and Mr. Willner held various operating positions, ultimately holding the position of Executive Vice President and Chief Operating Officer. Vision Cable was sold to The Newhouse Group Inc. in 1981 and Mr. Willner remained there to run the cable operations until 1985 when he and Mr. Knafel formed Insight Communications.

          In addition to many years of conventional cable television experience, our management team has been involved in the development and deployment of full service communications networks since 1989. Through a then related entity, Insight Communications Company UK, L.P., our management and related parties entered the cable television market in the United Kingdom, where today modern networks are widely deployed.

          As a result of our management’s British experience, we recognized that the technology and products developed in the United Kingdom would migrate to the United States in similar form. We focused on planning to upgrade our network promptly after it became clear that the 1996 Telecom Act would encourage competition in the communications industries. We understood, however, that the new products and services available with new technology were best deployed in markets which provided for efficiencies for branding and technical investment. Our original acquisition strategy, which focused on customer growth, was very successful. However, our management team recognized the opportunity to evolve from our role as a cable television operator providing only home video entertainment into a full service alternative communications network providing not only standard video services, but also interactive digital video, high-speed data access and communications products and services.

          Recognizing the opportunities presented by newly available products and services and favorable changes in the regulatory environment, we executed a series of asset swaps, acquisitions and entered into several joint ventures that resulted in our current composition. The largest of these transactions were the 50/50 joint ventures formed with AT&T Broadband (now known as Comcast Cable) and its affiliates in October 1998 with respect to the Indiana systems, in October 1999 with respect to the Kentucky systems and on January 5, 2001 with respect to the Illinois systems. As of December 31, 1997, our systems had approximately 180,000 customers with the two largest concentrations in Utah and Indiana, which together represented less than half of its customers. We believe that we have successfully transformed our assets so that we currently own, operate and manage a cable television network serving approximately 1.4 million customers, all of which are clustered in the contiguous states of Indiana, Kentucky, Illinois and Ohio. Our current assets are reflective of our strategy to own systems that have high ratios of customers to headends.

          In July 1999, the holders of the partnership interests of Insight Communications Company, L.P. (“Insight LP”) exchanged their respective partnership interests for our common stock. As a result, Insight LP became our wholly-owned subsidiary. Simultaneous with the exchange, we consummated an initial public offering of 26,450,000 shares of our Class A common stock, raising an aggregate of approximately $650.0 million. Our Class A common stock is currently listed on The Nasdaq National Market under the symbol “ICCI.”

9

Our Systems

          Our systems in Indiana, Kentucky, Illinois and Ohio serve approximately 1.3 million customers. We are the largest operator of cable systems in both Indiana and Kentucky and the second-largest in Illinois. Our systems are clustered or are capable of being clustered to serve an average of 93,000 customers per headend.

          We are able to realize significant operational synergies due to the size of the clusters in these states and the demographic proximity of all of our systems. In all of our systems, we have nearly completed upgrading our system infrastructures to enable us to deliver new technologies, products and services to provide our customers with greater value and choices in the face of growing competition. The highly clustered nature of our systems enables us to (a) more efficiently invest our marketing dollars and maximize our brand awareness, (b) more economically introduce new and enhanced services, and (c) reduce our overall operating and maintenance costs as a result of our ability to deploy fiber and reduce the number of headends we use throughout our systems. As a result, we believe we will be able to achieve improved operating performance on both a combined and system-wide basis. Our relationship with Comcast Cable provides us with substantial purchasing economies for both our programming and hardware needs.

     The Indiana Systems

          General

          As of December 31, 2002, the Indiana systems passed approximately 569,200 homes and served approximately 326,000 customers.  The Indiana systems are owned by Insight Communications Midwest, which is the largest cable operator in the state. Insight Communications Midwest, which was capitalized on October 31, 1998, was a 50/50 joint venture between us and an indirect subsidiary of AT&T Broadband (now known as Comcast Cable) until the contribution of its equity interests on October 1, 1999 into Insight Midwest. We serve as manager of the Indiana systems. We believe that there are additional opportunities to augment our position in Indiana through additional acquisitions and swaps.  Approximately 95% of our customers in Indiana  are served by three headends.

          We manage the day-to-day operations of Indiana and Kentucky cable television systems owned by Comcast of Montana/Indiana/Kentucky/Utah (formerly known as InterMedia Partners Southeast), an affiliate of Comcast Cable, which served approximately 114,600 customers as of December 31, 2002. The systems are operated by employees of our Indiana and Kentucky systems, and the overhead for these systems is allocated and charged against the cash flow of the managed systems.  On February 28, 2003, we exchanged with an affiliate of Comcast Cable the system we owned in Griffin, Georgia serving approximately 11,800 customers, plus $25 million, for certain of these managed systems serving approximately 23,400 customers which are presently tied into our Louisville system.  The management arrangement for the remaining managed systems expires on June 30, 2003.

          The Indiana systems are organized in four management districts:

          The Central District

          As of December 31, 2002, the Central District passed approximately 143,900 homes and served approximately 80,400 customers, principally in the community of Bloomington. The City of Bloomington, located 45 miles south of Indianapolis, is the home of Indiana University.  Besides the University, major employers include United Technology, Cook Incorporated and General Electric. The

10

median household income for the area is approximately $43,000 per year, while the median family income is approximately $55,800 per year. Household income differs from family income by including income from all persons in all households, including persons living alone and other non-family households.

          Digital video service was launched in Bloomington by AT&T Broadband (now known as Comcast Cable) prior to the formation of Insight Communications Midwest. All Bloomington digital customers have been migrated to our interactive Insight Digital service, including our video-on-demand service. Our Insightbb.com high-speed Internet service is also available in most of the district.  We expect to complete the upgrade of this district during 2003.

          The Southwest District

          As of December 31, 2002, the Southwest District passed approximately 127,100 homes and served approximately 59,600 customers, principally in the communities of Evansville and Jasper. The median household income for the area is approximately $40,500 per year, while the median family income is approximately $49,900 per year. Major employers include Alcoa, Whirlpool and Bristol-Myers Squibb.

          By the end of 2001, we completed the network upgrade of the Southwest District to 750 MHz and we are currently migrating the digital customers to our interactive Insight Digital service, including our video-on-demand service and the LocalSource interactive information service. Our Insightbb.com high-speed Internet service is available in Evansville.  In addition,telephone service was launched in parts of Evansville in August of 2001, with service expected to be available throughout most of the district by the end of 2003.

          A related party of Southern Indiana Gas and Electric Co. has overbuilt the City of Evansville. Southern Indiana Gas and Electric Co. has obtained franchises to provide cable television service in the City of Evansville and neighboring areas and commenced service in April 1999. We believe the Southern Indiana Gas and Electric Co. overbuild passed approximately 82,300 homes in our service area as of December 2002 and is expected to pass additional homes, and has commenced offering telephone and data service.

          The Northwest District

          As of December 31, 2002, the Northwest District passed approximately 103,700 homes and served approximately 68,200 customers, principally in the communities of Lafayette and Kokomo.  The City of Lafayette is the home of Purdue University. Besides Purdue University, major employers include Great Lakes Chemical, Lafayette Life Insurance, General Motors and Delco Remy. The median household income for the area is approximately $41,100 per year, while the median family income is approximately $52,400 per year.

          The upgrades of the Lafayette and Kokomo systems to 750 MHz are completed.   Our Insightbb.com high-speed Internet service and Insight Digital service, including the LocalSource product and our video-on-demand service is available in all of these markets.

          The Northeast District

          As of December 31, 2002, the Northeast District passed approximately 194,500 homes and served approximately 117,800 customers in Richmond as well as in the suburban communities near Indianapolis, including Anderson and Noblesville.  Indianapolis is the state capital of Indiana and is the twelfth largest city in the United States.  Major employers include General Motors, Eli Lilly and Belden

11

Wire and Cable. The median household income for the area is approximately $55,000 per year, while the median family income is approximately $63,500 per year.

          The upgrade of the Northeast District to 750 MHz was substantially completed in 2002.   Our Insightbb.com high-speed Internet service is available throughout most of the district.  AT&T Broadband (now known as Comcast Cable)  launched digital service in several of the markets in 1998, and we have migrated most of those customers to our interactive Insight Digital service, simultaneous with the launch throughout the district of our Insight Digital service, including the LocalSource product and our video-on-demand service.

     The Kentucky Systems

          General

          As of December 31, 2002, the Kentucky systems passed approximately 783,100 homes and served approximately 449,100 customers. This includes approximately 46,800 homes passed and approximately 23,400 customers served by the Jeffersonville, Indiana system which is owned by Insight Communications Midwest and operated by the management of the Louisville, Kentucky system. The Kentucky systems are owned by Insight Kentucky Partners II, L.P., which is the largest cable operator in the state. We acquired a combined 50% interest in Insight Kentucky’s parent on October 1, 1999, with related parties of AT&T Broadband (now known as Comcast Cable) holding the other 50% interest. Simultaneous with this acquisition, all of the equity interests were contributed into Insight Midwest. We serve as manager of the Kentucky systems.

          Our Kentucky systems are located in and around four of the five largest cities in the state: Louisville, Lexington, Covington, and Bowling Green. Over 99% of Insight Kentucky’s customers are served by a two-way active, 750 MHz network. Additionally, approximately 99% of the systems’ customers are served by four headends.

          Summary statistics for the Kentucky systems are as follows:

          Louisville

          As of December 31, 2002, the Louisville system passed approximately 472,900 homes and served approximately 260,000 customers. Louisville is the 16^th largest city in the United States and is Kentucky’s largest city.  It is located in the northern region of the state, bordering Indiana. Louisville is located within a day’s drive of nearly 50% of the United States population, which makes it an important crossroads for trade and business. Major employers in the Louisville metropolitan area include Humana, UPS, General Electric and Ford. The median household income for the area is approximately $39,800 while the median family income is approximately $48,300. Knology, Inc. obtained a franchise to provide cable television service in the City of Louisville, although it had not built a cable system as of December 31, 2002.

          The Louisville system substantially completed a network upgrade and we serve substantially all of our customers with two-way, 750 MHz cable.  The system is also in the final stage of headend consolidation, which will allow 99% of the customers in the system to be served from a single headend.

          InterMedia Capital Partners VI, LP launched its digital service in Louisville in November 1998. The service had approximately 85,600 customers in the Louisville system as of December 31, 2002.  We have migrated these customers to our interactive Insight Digital service, including the LocalSource product and

12

our video-on-demand service.  Digital phone service is available in over 73% of Louisville and our Insightbb.com high-speed Internet service is available in the Louisville system.

          Lexington

          As of December 31, 2002, the Lexington system passed approximately 125,500 homes and served approximately 83,400 customers from a single headend. Lexington is Kentucky’s second largest city, located in the central part of the state. Major employers in the Lexington area include the University of Kentucky, Toyota and Lexmark International. The median household income for the area is approximately $40,000, while the median family income is approximately $50,700.

          As of December 31, 2002, over 34% of basic customers have subscribed to our interactive digital service.  Nearly 17% of basic customers have Insightbb.com high speed Internet service.  In addition, digital telephone service was launched in mid-year 2002 on a node-by-node basis with completion anticipated in 2003.

          The Lexington system has completed a network upgrade and we serve all of our customers with two-way, 750 MHz cable. Our Insightbb.com high-speed Internet service and Insight Digital service, including the LocalSource product and our video-on-demand service are available throughout the system.

          Covington

          As of December 31, 2002, the Covington system passed approximately 149,100 homes and served approximately 82,900 customers from a single headend. Covington is Kentucky’s fifth largest city. Major employers in the Covington area include Delta Airlines, Toyota, Citicorp, DHL, Ashland, Inc., Fidelity Investments, BICC General Cable Corporation, Omnicare, COMAIR, Levis Strauss, Gap, Inc., Mazak Corp., and R.A. Jones, Inc.  The median household income for the area is approximately $48,700, while the median family income is approximately $57,000.

          The Covington system has completed a network upgrade and we serve all of our customers with two-way, 750 MHz cable. Our Insightbb.com high-speed Internet service and interactive Insight Digital service, including the LocalSource product and our video-on-demand service are available in the Covington system.

          Bowling Green

          As of December 31, 2002, the Bowling Green system passed approximately 35,600 homes and served approximately 22,800 customers from a single headend. Bowling Green is located 120 miles south of Louisville, 110 miles southwest of Lexington and 70 miles north of Nashville, Tennessee. Bowling Green is the fourth largest city in Kentucky and is the home of Western Kentucky University.  Major employers in the Bowling Green area include General Motors, Fruit of the Loom, Commonwealth Health Corporation, DESA International and Houchens Industries. The median household income for the area is approximately $32,600, while the median family income is approximately $42,700.

          The Bowling Green system is fully upgraded to two-way, 750 MHz cable. Our Insightbb.com high-speed Internet service and Insight Digital service, including the LocalSource product are available in Bowling Green.

13

     The Illinois Systems

          The Illinois systems are owned and operated by Insight Communications Midwest, and were contributed to Insight Communications Midwest on January 5, 2001  We serve as manager of the Illinois systems. These systems are located primarily in mid-sized communities, including Springfield, Rockford, Peoria, Dixon and Champaign/Urbana. The Rockford system was contributed by us and the other Illinois systems were acquired from certain cable subsidiaries of AT&T Corp.

          In total, the Illinois systems passed approximately 687,800 homes and served approximately 413,700 customers as of December 31, 2002, making us the second largest operator of cable television systems in the State of Illinois. These systems are served by networks with approximately 6,000 miles having a capacity greater than or equal to 750 MHz, 1,400 miles having a capacity greater than or equal to 450 MHz and less than 750 MHz, and 220 miles having a capacity less than 450 MHz. Consistent with our strategy of expeditiously upgrading our network to facilitate the deployment of our enhanced products and services, we are continuing to upgrade the network of the Illinois systems and intend to completely migrate the digital customers to our Insight Digital service. We expect to invest approximately $14.1 million to substantially complete the upgrade of these systems, and expect that the upgrades will be substantially completed during the first half of 2003. In the interim, we will launch Insight Digital on a node-by-node basis as system upgrades are completed. We anticipate additional deployments of our video-on-demand service by the middle of 2003 in selected areas in the Illinois systems.

          The Illinois systems are organized in five management districts:

          The Rockford District

          As of December 31, 2002, the Rockford District passed approximately 131,600 homes and served approximately 78,400 customers. Rockford is Illinois’ second largest city. Major employers in the Rockford metropolitan area include Chrysler Corporation, Rockford Health System, Sundstrand Corporation and Swedish American Health Systems. The median household income for the area is approximately $36,500 per year, while the median family income is approximately $44,600 per year.

          We completed the upgrade of the Rockford system and began launching our Insight Digital service on a node-by-node basis as system upgrades were completed beginning in February 1999. Since launching our Insight Digital service in the Rockford system, the activated areas achieved approximately 24% digital penetration from its customers, with incremental revenue per digital customer of approximately $20 per month.  Our Insightbb.com high-speed Internet service is available throughout the district.

          The Peoria District

          As of December 31, 2002, the Peoria District passed approximately 200,800 homes and served approximately 124,200 customers, principally in the communities of Bloomington and Peoria. Bloomington is located in the north central part of the state. The Bloomington system is home to Illinois State University with over 20,000 students and Illinois Wesleyan University with over 2,000 students. Peoria is the fifth largest city in Illinois, located in the north central part of the state. Major employers in the Peoria area include Maytag, Gates Rubber and the headquarters of Caterpillar. The median household income for the area is approximately $41,400, while the median family income is approximately $54,000.

          The Peoria system is currently undergoing a network upgrade from 550 MHz to 860 MHz, which is expected to be substantially completed during 2003. As of December 31, 2002, the Peoria District

14

achieved penetration levels for its digital service of nearly 21% in areas where digital service is available. We continue to migrate these customers to our interactive Insight Digital service, including the LocalSource product and our video-on-demand service during 2003. The system has launched high-speed data service and has achieved penetration levels of over 11% as of December 31, 2002 in areas where the service is available.

          The Dixon District

          As of December 31, 2002, the Dixon District passed approximately 68,700 homes and served approximately 43,800 customers, principally in the communities of Rock Falls, Peru and Dixon. Dixon is located in the north/central part of the State of Illinois. Major employers in the Dixon area include the State of Illinois, Raynor Manufacturing Company and Borg Warner Automotive. The median household income for the area is approximately $36,400, while the median family income is approximately $46,600.

          Approximately 63% of the Dixon system currently operates with a 860 MHz network.  As of December 31, 2002, the district achieved penetration levels for its digital service of approximately 17% in areas where the service is available. We continue to migrate these customers to our interactive Insight Digital service, including the LocalSource product and the Insightbb.com high-speed Internet service during 2003.

          The Springfield District

          As of December 31, 2002, the Springfield District passed approximately 187,900 homes and served approximately 115,300 customers, principally in the communities of Decatur and Springfield.  Springfield is the capital of Illinois and the sixth largest city in the state, located in the central part of the state. The major employer in the Springfield area is the State of Illinois. The median household income for the area is approximately $36,200, while the median family income is approximately $46,800. The City of Springfield is considering a municipal overbuild utilizing an existing plant owned by the city.

          The Springfield District is currently undergoing a network upgrade from 450 MHz to at least 750 MHz and two-way active. As of December 31, 2002, the district achieved penetration levels for its digital service of nearly 21% in the areas where the service is available. We continue to migrate these customers to our interactive Insight Digital service, including the LocalSource product and our video-on-demand service. The system is currently rolling out the Insightbb.com high-speed Internet service on a node-by-node basis.

          The Champaign District

          As of December 31, 2002, the Champaign District passed approximately 98,800 homes and served approximately 52,000 customers. Champaign/Urbana is located in the eastern central part of the state. The Champaign District is home to the University of Illinois with over 45,000 students. Major employers in the Champaign and Urbana areas include the University of Illinois, Kraft Foods and the Carle Clinic Association. The median household income for the area is approximately $30,300 and the median family income for the area is approximately $47,600.

          The Champaign District serves substantially all of its customers by a two-way, 750 MHz network. The district had approximately 9,700 digital customers as of December 31, 2002. We continue to migrate these customers to our interactive Insight Digital service, including the LocalSource service and our video-on-demand service. The Champaign District has launched high-speed data service and as of December 31, 2002 had approximately 8,400 customers.

15

     The Ohio System

          In connection with the AT&T transactions in January 2001, the common equity of Insight Communications of Central Ohio, LLC, the entity holding the Ohio system, was contributed to Insight Midwest. As of December 31, 2002, the Ohio system passed approximately 198,700 homes and served approximately 88,100 customers from a single headend. The system serves the eastern portion of the City of Columbus and adjacent suburban communities within eastern Franklin County and the contiguous counties of Delaware, Licking, Fairfield and Pickaway. The City of Columbus is the 34th largest designated market area, the capital of Ohio and the home of Ohio State University. In addition to the state government and university, the Columbus economy is well diversified with the significant presence of prominent companies such as The Limited, Merck, Wendy’s, Nationwide Insurance, Borden and Worthington Industries. The median household income for our service area is approximately $40,300 per year, while the median family income is approximately $50,600 per year.

          Approximately 91% of the Ohio system’s customers are served by a network upgraded to 870 MHz capacity, and our upgrade efforts are continuing. As of December 31, 2002, approximately 29,400 customers have subscribed to our interactive digital service, representing a penetration of nearly 36% in areas where digital service is available. The RoadRunner high-speed data service, launched in 2000, has achieved a penetration of 10% as of December 31, 2002 in areas where digital service is available. In addition, the Ohio system provides exclusive sports programming under the “Central Ohio Sport!” brand, featuring sporting events from Ohio State University.

          In 1996, Ameritech obtained a citywide cable television franchise for the City of Columbus and suburban communities in Franklin County. WideOpenWest acquired the assets of Ameritech in December 2001, and has built its citywide franchise, both in our service area and in the Time Warner service area on the west side of Columbus. We and Time Warner service virtually distinct areas and therefore do not compete with one another. The areas of the Ohio system served by both us and WideOpenWest pass approximately 129,100 homes, representing 65% of the Ohio system’s total homes passed as of December 31, 2002.

          We have launched a telephone service alternative to SBC (Ameritech) through our arrangement with Comcast Cable.

Customer Rates

          Rates charged to customers vary based on the market served and service selected. As of December 31, 2002, the weighted average revenue for our monthly combined basic and classic service was approximately $32.65.  The national average was estimated to be $32.85 for the same services as of December 31, 2002, as reported by Paul Kagan & Associates.

          A one-time installation fee, which we may reduce during promotional periods, is charged to new customers, as well as reconnected customers. We charge monthly fees for set top boxes and remote control devices. We also charge administrative fees for delinquent payments for service. Customers are free to discontinue service at any time without additional charge and may be charged a reconnection fee to resume service. Commercial customers, such as hotels, motels and hospitals, are charged negotiated monthly fees and a non-recurring fee for the installation of service. Multiple dwelling unit accounts may be offered a bulk rate in exchange for single-point billing and basic service to all units.

16

Sales and Marketing

          Our strategy is to sell multiple services to our customers, including video, high-speed data and telephone services. Customers who purchase more than one service are eligible for a bundled discount.  We regularly use targeted campaigns to sell the appropriate services to both our existing and our potential customer base. Our customer service representatives are trained and given the support to use their daily contacts with customers as opportunities to sell our new service offerings.

          Due to the nature of the communities we serve, we are able to market our services in ways not typically used by urban cable operators. We can market products and services to our customers at our local offices where many of our customers pay their cable bills in person. Examples of our in-store marketing include the promotion of premium services as well as point-of-purchase demonstrations that will allow customers to experience our high-speed Internet service and digital products. We aggressively promote our services utilizing both broad and targeted marketing tactics, including outdoor billboards, outbound telemarketing, retail partnerships, direct mail, door-to-door sales, cross-channel promotion, print and broadcast.

          We build awareness of the Insight Communications brand through advertising campaigns and strong community relations. As a result of our branding efforts and consistent service standards, we believe we have developed a reputation for quality and reliability. We also believe that our marketing strategies are particularly effective due to our regional clustering and market significance, which enables us to reach a greater number of both current and potential customers in an efficient, uniform manner.

Programming Suppliers

          Most cable companies purchase their programming product directly from the program networks by entering into a contractual relationship with the program supplier. The vast majority of these program suppliers offer the cable operator license fee rate cards with size-based volume discounts and other financial incentives, such as launch and marketing support and cross-channel advertising.

          Currently there are over 160 cable networks competing for carriage on our analog and digital platforms. We have continued to leverage both our systems’ analog upgrades and newly deployed digital packages as an incentive to our suppliers to secure long term programming deals with reasonable price structures and other creative financial arrangements to offset license fee increases.

          Because of our relationship with Comcast Cable (formerly known as AT&T Broadband), we have the right to purchase certain programming services for our systems directly through Comcast Cable’s programming supplier Satellite Services, Inc. We believe that Satellite Services has attractive programming costs. Additionally, given the clustering of our systems in the Midwest, we have been successful in affiliating with regionally based programming products such as sports and news, at lower than average license fees.

          Under the terms of Insight Midwest’s partnership agreement, we and Comcast Cable are each required to use commercially reasonable efforts to extend to Insight Midwest all of the programming discounts available to us.  Accordingly, we should benefit from both the existing Satellite Services arrangement as well as additional discounts available to Comcast Cable.  However, we cannot predict with certainty when these benefits will occur, or the extent to which they actually will be achieved.

17

Commitment to Community Relations

          We believe that maintaining strong community relations will continue to be an important factor in ensuring our long-term success. Our community-oriented initiatives include educational programs and the sponsorship of programs and events recognizing local citizens. In addition, members of our management team host community events for political and business leaders as well as representatives of the local media, where they discuss our operations and recent developments in the telecommunications industry. We have received numerous awards recognizing our ongoing community relations, and we believe that such initiatives result in consumer and governmental goodwill and name recognition, increasing customer loyalty and likely facilitating any future efforts to provide new communications services.

          We encourage all of our local management teams to take leadership roles in community and civic activities. Over the years, our systems have received various forms of recognition for their efforts to support local causes and charities as well as programs that encourage a better way of life in the communities they serve.

          All of our systems provide ongoing support for Cable in the Classroom, an industry initiative that earns recognition both locally and nationally for its efforts in furthering the education of children. Our newest public affairs initiative, “In the Know,” further underscores our commitment to education by offering the vast uses of high-speed Internet access into each accredited school in our service area. “In the Know” builds upon the cable industry’s pledge to provide free high-speed Internet access to eligible local schools and public libraries. We have taken that pledge a step further to offer students and teachers the resources of broadband content and robust cable programming to enrich the learning experience.

          With cable modems in the classroom, teachers and students alike can benefit from the speedy downloads and access to advanced applications to enhance the learning experience. In addition to providing this advanced technology free of charge, we intend to continue offering programming enhancements in partnership with various cable networks. As an increasing number of areas become serviceable for high-speed service, “In the Know” is designed to incorporate multi-faceted synergies with these programmers in order to provide specialized educational offerings for each of our systems.

          In 2001, our Louisville, Kentucky system partnered with Oxygen Media to form “The Young Women’s Technology Fellowship” as part of our “In the Know” efforts.  This program was a synergy of the common goals between Insight and Oxygen in order to address the issue of the digital divide through cable’s robust resources.  The Fellowship provided advanced training and resources to 12 motivated young women most in need.  This program received a great deal of recognition both locally and industry-wide, including a 2002 Beacon Award by the Cable Television Public Affairs Association.

          Building upon the success of our previous “In the Know” efforts, in 2002 we introduced a similar program in partnership with ESPN and the Boys &Girls Club in Anderson, Indiana. Also aimed at bridging the digital divide, this four-week online curriculum centered around the NCAA basketball tournament and incorporated online research skills with the technology of cable modem access.

          One of the advantages a local cable operator has over nationally distributed competitors is its ability to develop local programming. To further strengthen community relations and differentiate us from direct broadcast satellite television systems and other multichannel video providers, we provide locally produced and oriented programming. Several of our systems have full production capabilities, with in-house and/or mobile production studios to create local content. To attract viewers, we offer a broad range of local programming alternatives, including community information, local government proceedings and

18

local specialty interest shows. In some of our markets, we are the exclusive broadcaster of local college and high school sporting events, which we believe provides unique programming and builds customer loyalty. We believe that our emphasis on local programming creates significant opportunities for increased advertising revenues. Locally originated programming will also play an integral role in the deployment of our new and enhanced products and services.

Franchises

          Cable television systems are constructed and operated under fixed-term non-exclusive franchises or other types of operating authorities that are granted by either local governmental or centralized state authorities. These franchises typically contain many conditions, such as:

•	Time limitations on commencement and completion of construction;
•	Conditions of service, including the number of channels, the provision of free service to schools and other public institutions;
•	The maintenance of insurance and indemnity bonds; and
•	The payment of fees to communities.
	These local franchises are subject to limits imposed by federal law.

          As of December 31, 2002, we held 548 franchises in the aggregate, consisting of 196 in Indiana, 195 in Kentucky, 124 in Illinois, 29 in Ohio and 4 in Georgia. Many of these franchises require the payment of fees to the issuing authorities of 3% to 5% of gross revenues, as defined by each franchise agreement, from the related cable system.

          The 1984 Cable Act prohibits franchising authorities from imposing annual franchise fees in excess of 5% of gross annual revenues and also permits the cable television system operator to seek renegotiation and modification of franchise requirements if warranted by changed circumstances that render performance commercially impracticable.

          The following table summarizes information relating to the year of expiration of our franchises, excluding the managed systems, as of December 31, 2002:

Year of Franchise Expiration	Number of Franchises		Percentage of Total Franchises			Number of Basic Customers		Percentage of Total Basic Customers
Expired*		37		6.8	%		91,000		7.0	%
2003		49		8.9			29,600		2.3
2004		38		6.9			98,400		7.6
2005		40		7.3			49,400		3.8
2006		35		6.4			38,600		3.0
After 2006		349		63.7			995,000		76.4

*  Such franchises are operated on a month-to-month basis and are in the process of being renewed.

          The Communications Act of 1934, as amended, provides, among other things, for an orderly franchise renewal process which limits a franchising authority’s ability to deny a franchise renewal if the incumbent operator follows prescribed renewal procedures. In addition, the Communications Act of 1934, as amended, established comprehensive renewal procedures which require, when properly elected by an operator, that an incumbent franchisee’s renewal application be assessed on its own merits and not as part of a comparative process with competing applications.

19

          We believe that our cable systems generally have good relationships with their respective franchise authorities. We have never had a franchise revoked or failed to have a franchise renewed.

Competition

          Cable systems face increasing competition from alternative methods of receiving and distributing their core video business. Both wireline and wireless competitors have made inroads in competing against incumbent cable operators. The extent to which a cable operator is competitive depends, in part, upon its ability to provide to customers, at a reasonable price, a greater variety of programming and other communications services than are available off-air or through alternative delivery sources and upon superior technical performance and customer service.

          Congress has enacted legislation and the FCC has adopted regulatory policies providing a more favorable operating environment for new and existing technologies, in particular direct broadcast satellite television systems operators, that have the potential to provide increased competition to cable systems. Congress has also enacted legislation which permits direct broadcast satellite companies to retransmit local television signals, eliminating one of the objections of consumers about switching to satellites.

          The 1996 Telecom Act makes it easier for local exchange telephone companies and others to provide a wide variety of video services competitive with services provided by cable systems.  Local exchange telephone companies and other companies also provide facilities for the transmission and distribution to homes and businesses of interactive computer-based services, including the Internet, as well as data and other non-video services. The ability of local exchange telephone companies to cross-subsidize video, data and telecommunication services also poses some threat to cable operators.

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

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

          Cable television systems are operated under non-exclusive franchises granted by local authorities thereby allowing more than one cable system to be built in the same area. Although the number of municipal and commercial overbuild cable systems is small, the potential profitability of a cable system is adversely affected if the local customer base is divided among multiple systems. Additionally, constructing a competing cable system is a capital intensive process which involves a high degree of risk. We believe that in order to be successful, a competitor’s overbuild would need to be able to serve the

20

homes in the overbuilt area on a more cost-effective basis than we can. Any such overbuild operation would require either significant access to capital or access to facilities already in place that are capable of delivering cable television programming. As of December 31, 2002, our Evansville, Indiana and Columbus, Ohio systems were overbuilt. As a result, approximately 10% of the total homes passed by our systems were overbuilt as of such date.

          Direct broadcast satellite television systems use digital video compression technology to increase the channel capacity of their systems. Direct broadcast satellite television systems’ programming is currently available to individual households, condominiums and apartment and office complexes through conventional, medium and high-power satellites. High-power direct broadcast satellite television system service is currently being provided by DIRECTV, Inc., and EchoStar Communications Corporation. Direct broadcast satellite television systems have some advantages over cable systems that were not upgraded, such as greater channel capacity and digital picture quality. In addition, legislation has been enacted which permits direct broadcast satellite television systems to retransmit the signals of local television stations in their local markets. However, direct broadcast satellite television systems have a limited ability to offer locally produced programming, and do not have a significant local presence in the community. In addition, direct broadcast satellite television systems packages can be more expensive than cable, especially if the subscriber intends to view the service on more than one television in the household. Finally, direct broadcast satellite television systems do not have the same full two-way capability, which we believe will limit their ability to compete in a meaningful way in interactive television, high-speed data and voice communications. Direct broadcast satellite has enjoyed a 19% average penetration nationwide, and we believe that satellite penetration in our various markets generally is in accordance with such average.

          Several telephone companies are introducing digital subscriber line technology (“DSL”), which allows Internet access over traditional phone lines at data transmission speeds greater than those available by a standard telephone modem. Although these transmission speeds are not as great as the transmission speed of a cable modem, we believe that the transmission speed of DSL technology are sufficiently high that such technology will compete with cable modem technology. The FCC is currently considering its authority to promulgate rules to facilitate the deployment of these services and regulate areas including high-speed data and interactive Internet services. We cannot predict the outcome of any FCC proceedings, or the impact of that outcome on the success of our Internet access services or on our operations.  In addition to DSL and dialup modems for providing Internet access, other technologies are entering the marketplace. For example, there is a wireless technology popularly known as “Wi-Fi,” which is faster than dial-up, but slower than cable modem technology.

          As we expand our offerings to include telephone services, our telephone services will be subject to competition from existing providers, including both local exchange telephone companies and long-distance carriers. The telecommunications industry is highly competitive and many telephone service providers may have greater financial resources than we have, or have established relationships with regulatory authorities. We cannot predict the extent to which the presence of these competitors will influence customer penetration in our telephone service areas. While we intend to add our telephone service offering to our various markets, the service has only been launched in selected markets and has not yet achieved any material penetration levels.

          Other new technologies may become competitive with services that cable communications systems can offer. Advances in communications technology, as well as changes in the marketplace and the regulatory and legislative environment are constantly occurring. Thus, we cannot predict the effect of ongoing or future developments on the cable communications industry or on our operations.

21

Legislation and Regulation

          The cable television industry is regulated by the FCC, some state governments and the applicable local governments. In addition, various legislative and regulatory proposals under consideration from time to time by Congress and various federal agencies have in the past, and may in the future, materially affect us. The following is a summary of federal laws and regulations materially affecting the growth and operation of the cable television industry and a description of certain state and local laws. We believe that the regulation of the cable television industry remains a matter of interest to Congress, the FCC and other regulatory authorities. There can be no assurance as to what, if any, future actions such legislative and regulatory authorities may take or the effect thereof on us.

     Federal Legislation

          The principal federal statute governing the cable television industry is the Communications Act. As it affects the cable television industry, the Communications Act has been significantly amended on three occasions, by the 1984 Cable Act, the 1992 Cable Act and the 1996 Telecom Act. The 1996 Telecom Act altered the regulatory structure governing the nation’s telecommunications providers. It removed barriers to competition in both the cable television market and the local telephone market. Among other things, it also reduced the scope of cable rate regulation.

     Federal Regulation

          The FCC, the principal federal regulatory agency with jurisdiction over cable television, has adopted regulations covering such areas as cross-ownership between cable television systems and other communications businesses, carriage of television broadcast programming, cable rates, consumer protection and customer service, leased access, indecent programming, programmer access to cable television systems, programming agreements, technical standards, consumer electronics equipment compatibility, ownership of home wiring, program exclusivity, equal employment opportunity, consumer education and lockbox enforcement, origination cablecasting and sponsorship identification, children’s programming, signal leakage and frequency use, maintenance of various records, and antenna structure notification, marking and lighting. The FCC has the authority to enforce these regulations through the imposition of substantial fines, the issuance of cease and desist orders and/or the imposition of other administrative sanctions, such as the revocation of FCC licenses needed to operate certain transmission facilities often used in connection with cable operations. A brief summary of certain of these federal regulations as adopted to date follows.

          Rate Regulation

          The 1984 Cable Act codified existing FCC preemption of rate regulation for premium channels and optional non-basic program tiers. The 1984 Cable Act also deregulated basic cable rates for cable television systems determined by the FCC to be subject to effective competition. The 1992 Cable Act substantially changed the previous statutory and FCC rate regulation standards. The 1992 Cable Act replaced the FCC’s old standard for determining effective competition, under which most cable television systems were not subject to rate regulation, with a statutory provision that resulted in nearly all cable television systems becoming subject to rate regulation of basic service. The 1996 Telecom Act expanded the definition of effective competition to cover situations where a local telephone company or its affiliate, or any multichannel video provider using telephone company facilities, offers comparable video service by any means except direct broadcast satellite television systems. Satisfaction of this test deregulates all rates.

22

          For cable systems not subject to effective competition, the 1992 Cable Act required the FCC to adopt a formula for franchising authorities to assure that basic cable rates are reasonable; allowed the FCC to review rates for cable programming service tiers, other than per-channel or per-program services, in response to complaints filed by franchising authorities and/or cable customers; prohibited cable television systems from requiring basic customers to purchase service tiers above basic service in order to purchase premium services if the system is technically capable of compliance; required the FCC to adopt regulations to establish, on the basis of actual costs, the price for installation of cable service, remote controls, converter boxes and additional outlets; and allowed the FCC to impose restrictions on the retiering and rearrangement of cable services under certain limited circumstances. The 1996 Telecom Act limited the class of complainants regarding cable programming service tier rates to franchising authorities only, and ended FCC regulation of cable programming service tier rates on March 31, 1999. The 1996 Telecom Act also relaxes existing uniform rate requirements by specifying that such requirements do not apply where the operator faces effective competition, and by exempting bulk discounts to multiple dwelling units, although complaints about predatory pricing may be lodged with the FCC.

          The FCC’s implementing regulations contain standards for the regulation of basic service rates. Local franchising authorities are empowered to order a reduction of existing rates which exceed the maximum permitted level for basic services and associated equipment, and refunds can be required. The FCC adopted a benchmark price cap system for measuring the reasonableness of existing basic service rates. Alternatively, cable operators have the opportunity to make cost-of-service showings which, in some cases, may justify rates above the applicable benchmarks. The rules also require that charges for cable-related equipment, converter boxes and remote control devices, for example, and installation services be unbundled from the provision of cable service and based upon actual costs plus a reasonable profit. The regulations also provide that future rate increases may not exceed an inflation-indexed amount, plus increases in certain costs beyond the cable operator’s control, such as taxes, franchise fees and increased programming costs. Cost-based adjustments to these capped rates can also be made in the event a cable television operator adds or deletes channels. There is also a streamlined cost-of-service methodology available to justify a rate increase on the basic tier for “significant” system upgrades.

          Finally, there are regulations which require cable television systems to permit customers to purchase video programming on a per channel or a per program basis without the necessity of subscribing to any tier of service, other than the basic service tier.

          Carriage of Broadcast Television Signals

          The 1992 Cable Act contains signal carriage requirements which allow commercial television broadcast stations that are “local” to a cable television system, that is to say that the system is located in the station’s designated market area, to elect every three years whether to require the cable television system to carry the station, subject to certain exceptions, or whether the cable television system will have to negotiate for “retransmission consent” to carry the station. The most recent election between must-carry and retransmission consent was October 1, 2002.  A cable television system is generally required to devote up to one-third of its activated channel capacity for the carriage of local commercial television stations whether pursuant to mandatory carriage requirements or the retransmission consent requirements of the 1992 Cable Act.  Local non-commercial television stations are also given mandatory carriage rights, subject to certain exceptions, within the larger of:  (i) a 50 mile radius from the station’s city of license; or (ii) the station’s Grade B contour, a measure of signal strength.  Unlike commercial stations, noncommercial stations are not given the option to negotiate retransmission consent for the carriage of their signal.  In addition, cable television systems have to obtain retransmission consent for the carriage of all “distant” commercial broadcast stations, except for certain “superstations,” which are commercial satellite-delivered independent stations such as WGN. To date, compliance with the “retransmission

23

consent” and “must carry” provisions of the 1992 Cable Act has not had a material effect on us, although this result may change in the future depending on such factors as market conditions, channel capacity and similar matters when such arrangements are renegotiated. The FCC has issued a decision in a rulemaking proceeding dealing with the carriage of television signals in a digital format, both high definition and standard digital. The rules require carriage of local television broadcast stations that transmit solely in a digital format. However, a station that transmits in both analog and digital formats during the current several-year transition period is entitled to carriage of only its analog signal. The FCC has been asked to reconsider this decision. The FCC is also considering whether the mandatory carriage obligation should extend beyond the primary video signal to multiple services transmitted by a station over its digital channel.  The outcome of these proceedings could have a material effect on the number of services that a cable operator will be required to carry.

          Deletion of Certain Programming

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

          Franchise Fees

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

          Renewal of Franchises

          The 1984 Cable Act and the 1992 Cable Act establish renewal procedures and criteria designed to protect incumbent franchisees against arbitrary denials of renewal and to provide specific grounds for franchising authorities to consider in making renewal decisions, including a franchisee’s performance under the franchise and community needs. Even after the formal renewal procedures are invoked, franchising authorities and cable television operators remain free to negotiate a renewal outside the formal process. Nevertheless, renewal is by no means assured, as the franchisee must meet certain statutory standards. Even if a franchise is renewed, a franchising authority may impose new and more onerous requirements such as upgrading facilities and equipment, although the municipality must take into account the cost of meeting such requirements. Similarly, if a franchising authority’s consent is required for the purchase or sale of a cable television system or franchises, such authority may attempt to impose burdensome or onerous franchise requirements in connection with a request for such consent. Historically, franchises have been renewed for cable television operators that have provided satisfactory services and

24

have complied with the terms of their franchises. At this time, we are not aware of any current or past material failure on our part to comply with our franchise agreements. We believe that we have generally complied with the terms of our franchises and have provided quality levels of service.

          The 1992 Cable Act makes several changes to the process under which a cable television operator seeks to enforce its renewal rights which could make it easier in some cases for a franchising authority to deny renewal. Franchising authorities may consider the “level” of programming service provided by a cable television operator in deciding whether to renew. For alleged franchise violations occurring after December 29, 1984, franchising authorities are no longer precluded from denying renewal based on failure to substantially comply with the material terms of the franchise where the franchising authority has “effectively acquiesced” to such past violations. Rather, the franchising authority is estopped if, after giving the cable television operator notice and opportunity to cure, it fails to respond to a written notice from the cable television operator of its failure or inability to cure. Courts may not reverse a denial of renewal based on procedural violations found to be “harmless error.”

          Channel Set-Asides

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

          Ownership

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

          The 1996 Telecom Act generally prohibits local exchange carriers from purchasing a greater than 10% ownership interest in a cable television system located within the local exchange carrier’s telephone service area, prohibits cable operators from purchasing local exchange carriers whose service areas are located within the cable operator’s franchise area, and prohibits joint ventures between operators of cable television systems and local exchange carriers operating in overlapping markets. There are some statutory exceptions, including a rural exemption that permits buyouts in which the purchased cable television system or local exchange carrier serves a non-urban area with fewer than 35,000 inhabitants, and exemptions for the purchase of small cable television systems located in non-urban areas. Also, the FCC may grant waivers of the buyout provisions in certain circumstances.

25

          The 1996 Telecom Act made several other changes to relax ownership restrictions and regulations of cable television systems. The 1996 Telecom Act repealed the 1992 Cable Act’s three-year holding requirement pertaining to sales of cable television systems. The statutory broadcast/cable cross-ownership restrictions imposed under the 1984 Cable Act were eliminated in 1996, although the parallel FCC regulations prohibiting broadcast/cable common-ownership remained in effect. The U.S. Court of Appeals for the District of Columbia circuit struck down these rules.  The FCC’s rules also generally prohibit cable operators from offering satellite master antenna service separate from their franchised systems in the same franchise area, unless the cable operator is subject to “effective competition” there.

          The 1996 Telecom Act amended the definition of a “cable system” under the Communications Act so that competitive providers of video services will be regulated and franchised as “cable systems” only if they use public rights-of-way. Thus, a broader class of entities providing video programming may be exempt from regulation as cable television systems under the Communications Act.

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

          Access to Programming

          The 1992 Cable Act imposed restrictions on the dealings between cable operators and cable programmers. Of special significance from a competitive business posture, the 1992 Cable Act precludes video programmers affiliated with cable companies from favoring their affiliated cable operators and requires such programmers to sell their programming to other multichannel video distributors. This provision limits the ability of vertically integrated cable programmers to offer exclusive programming arrangements to cable companies. The prohibition on certain types of exclusive programming arrangements was set to expire on October 5, 2002, but the FCC has determined that a five-year extension of the prohibition is necessary to preserve and protect competition in video programming distribution.

          Privacy

          The 1984 Cable Act imposes a number of restrictions on the manner in which cable television operators can collect and disclose data about individual system customers. The statute also requires that the system operator periodically provide all customers with written information about its policies regarding the collection and handling of data about customers, their privacy rights under federal law and their enforcement rights. In the event that a cable television operator was found to have violated the customer privacy provisions of the 1984 Cable Act, it could be required to pay damages, attorneys’ fees and other costs. Under the 1992 Cable Act, the privacy requirements were strengthened to require that cable television operators take such actions as are necessary to prevent unauthorized access to personally identifiable information.  Certain of these requirements were modified by the Electronic Communications Privacy Act of 2001.

          Franchise Transfers

          The 1992 Cable Act requires franchising authorities to act on any franchise transfer request submitted after December 4, 1992 within 120 days after receipt of all information required by FCC regulations and by the franchising authority. Approval is deemed to be granted if the franchising authority fails to act within such period.

26

          Technical Requirements

          The FCC has imposed technical standards applicable to all classes of channels which carry downstream National Television System Committee video programming. The FCC also has adopted additional standards applicable to cable television systems using frequencies in the 108 to 137 MHz and 225 to 400 MHz bands in order to prevent harmful interference with aeronautical navigation and safety radio services and has also established limits on cable television system signal leakage. Periodic testing by cable television operators for compliance with the technical standards and signal leakage limits is required and an annual filing of the results of these measurements is required. The 1992 Cable Act requires the FCC to periodically update its technical standards to take into account changes in technology. Under the 1996 Telecom Act, local franchising authorities may not prohibit, condition or restrict a cable television system’s use of any type of customer equipment or transmission technology.

          The FCC has adopted regulations to implement the requirements of the 1992 Cable Act designed to improve the compatibility of cable television systems and consumer electronics equipment. These regulations, among other things, generally prohibit cable television operators from scrambling their basic service tier. The 1996 Telecom Act directs the FCC to set only minimal standards to assure compatibility between television sets, VCRs and cable television systems, and otherwise to rely on the marketplace. Pursuant to the 1992 Cable Act, the FCC has adopted rules to assure the competitive availability to consumers of customer premises equipment, such as converters, used to access the services offered by cable television systems and other multichannel video programming distributors. Pursuant to those rules, consumers are given the right to attach compatible equipment to the facilities of their multichannel video programming distributors so long as the equipment does not harm the network, does not interfere with the services purchased by other customers and is not used to receive unauthorized services. As of July 1, 2000, multichannel video programming distributors, other than operators of direct broadcast satellite television systems, were required to separate security from non-security functions in the customer premises equipment which they sell or lease to their customers and offer their customers the option of using component security modules obtained from the multichannel video programming distributors with set-top units purchased or leased from retail outlets. As of January 1, 2005, multichannel video programming distributors will be prohibited from distributing new set-top equipment integrating both security and non-security functions to their customers.

          Inside Wiring; Customer Access

          FCC rules require an incumbent cable operator upon expiration of a multiple dwelling unit service contract to sell, abandon, or remove “home run” wiring that was installed by the cable operator in a multiple dwelling unit building. These inside wiring rules assist building owners in their attempts to replace existing cable operators with new programming providers who are willing to pay the building owner a higher fee, where such a fee is permissible.  The FCC has also issued an order preempting state, local and private restrictions on over-the-air reception antennas placed on rental properties in areas where a tenant has exclusive use of the property, such as balconies or patios. However, tenants may not install such antennas on the common areas of multiple dwelling units, such as on roofs. This order limits the extent to which multiple dwelling unit owners may enforce certain aspects of multiple dwelling unit agreements which otherwise would prohibit, for example, placement of direct broadcast satellite television systems television receiving antennae in multiple dwelling unit areas, such as apartment balconies or patios, under the exclusive occupancy of a renter.

27

          Pole Attachments

          The FCC currently regulates the rates and conditions imposed by certain public utilities for use of their poles unless state public service commissions are able to demonstrate that they adequately regulate the rates, terms and conditions of cable television pole attachments.  A number of states and the District of Columbia have certified to the FCC that they adequately regulate the rates, terms and conditions for pole attachments. Illinois, Ohio, and Kentucky, states in which we operate, have made such a certification.  In the absence of state regulation, the FCC administers such pole attachment and conduit use rates through use of a formula which it has devised. Pursuant to the 1996 Telecom Act, the FCC has adopted a new rate formula for any attaching party, including cable television systems, which offers telecommunications services. This new formula will result in higher attachment rates than at present, but they will apply only to cable television systems which elect to offer telecommunications services.  Any increases pursuant to this new formula began in 2001,and will be phased in by equal increments over the five ensuing years.  The FCC ruled that the provision of Internet services will not, in and of itself, trigger use of the new formula. The Supreme Court affirmed this decision and also held that the FCC ‘s authority to regulate rates for attachments to utility poles extended to attachments by cable operators and telecommunications carriers that are used to provide Internet service or for wireless telecommunications service.  This development benefits our business and will place a constraint on the prices that utilities can charge with regard to the cable facilities over which we also provide Internet access service.  However, the FCC has also initiated a proceeding to determine whether it should adjust certain elements of the current rate formula. If adopted, these adjustments could increase rates for pole attachments and conduit space.

          Other FCC Matters

          FCC regulation pursuant to the Communications Act also includes matters regarding a cable television system’s carriage of local sports programming; restrictions on origination and cablecasting by cable television operators; rules governing political broadcasts; equal employment opportunity; deletion of syndicated programming; registration procedure and reporting requirements; customer service; closed captioning; obscenity and indecency; program access and exclusivity arrangements; and limitations on advertising contained in nonbroadcast children’s programming.

          The FCC has recently issued a Notice of Inquiry covering a wide range of issues relating to Interactive Television (“ITV”). Examples of ITV services are interactive electronic program guides and access to a graphic interface that provides supplementary information related to the video display. In the near term, cable systems are likely to be the platform of choice for the distribution of ITV services. The FCC has posed a series of questions including the definition of ITV, the potential for discrimination by cable systems in favor of affiliated ITV providers, enforcement mechanisms, and the proper regulatory classification of ITV service.

          Copyright

          Cable television systems are subject to federal copyright licensing covering carriage of broadcast signals. In exchange for making semi-annual payments to a federal copyright royalty pool and meeting certain other obligations, cable television operators obtain a statutory license to retransmit broadcast signals. The amount of this royalty payment varies, depending on the amount of system revenues from certain sources, the number of distant signals carried, and the location of the cable television system with respect to over-the-air television stations. Any future adjustment to the copyright royalty rates will be done through an arbitration process to be supervised by the U.S. Copyright Office. Cable television operators are liable for interest on underpaid and unpaid royalty fees, but are not entitled to collect interest on refunds received for overpayment of copyright fees.

28

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

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

          Licenses to perform copyrighted music by cable television systems themselves, including on local origination channels, in advertisements inserted locally on cable television networks, and in cross-promotional announcements, must be obtained by the cable television operator from the American Society of Composers and Publishers, BMI and/or SESAC, Inc.

          State and Local Regulation

          Cable television systems generally are operated pursuant to nonexclusive franchises, permits or licenses granted by a municipality or other state or local government entity. The terms and conditions of franchises vary materially from jurisdiction to jurisdiction, and even from city to city within the same state, historically ranging from reasonable to highly restrictive or burdensome. Franchises generally contain provisions governing fees to be paid to the franchising authority, length of the franchise term, renewal, sale or transfer of the franchise, territory of the franchise, design and technical performance of the system, use and occupancy of public streets and number and types of cable television services provided. The terms and conditions of each franchise and the laws and regulations under which it was granted directly affect the profitability of the cable television system. The 1984 Cable Act places certain limitations on a franchising authority’s ability to control the operation of a cable television system. The 1992 Cable Act prohibits exclusive franchises, and allows franchising authorities to exercise greater control over the operation of franchised cable television systems, especially in the area of customer service and rate regulation. The 1992 Cable Act also allows franchising authorities to operate their own multichannel video distribution system without having to obtain a franchise and permits states or local franchising authorities to adopt certain restrictions on the ownership of cable television systems. Moreover, franchising authorities are immunized from monetary damage awards arising from regulation of cable television systems or decisions made on franchise grants, renewals, transfers and amendments. The 1996 Telecom Act prohibits a franchising authority from either requiring or limiting a cable television operator’s provision of telecommunications services.

          Various proposals have been introduced at the state and local levels with regard to the regulation of cable television systems, and a number of states have adopted legislation subjecting cable television systems to the jurisdiction of centralized state governmental agencies, some of which impose regulation of a character similar to that of a public utility. To date, none of the states in which we currently operate has enacted state level regulation.

29

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

     Internet Access Service

          We offer a service which enables consumers to access the Internet at high speeds via high capacity broadband transmission facilities and cable modems. We compete with many other providers of Internet access services which are known as Internet service providers (“ISPs”).  ISPs include such companies as America Online and Mindspring Enterprises as well as major telecommunications providers, including AT&T and local exchange telephone companies. A number of local franchising authorities have attempted to require cable companies offering Internet access service over their broadband facilities to allow access to those facilities on an unbundled basis to other ISPs.   To date, all such efforts have been overturned in the courts.  However, many ISPs and local franchising authorities have continued to ask the U.S. Congress and the FCC to mandate such access, or at least to allow local authorities to impose such a requirement.  Although the FCC has thus far declined to impose such an access requirement on cable companies, the issue remains under consideration.  The FCC has recently decided that cable Internet service should be classified for regulatory purposes as an “information service” rather than either a “cable service” or a “telecommunications service.” Concurrently, the FCC has initiated a wide-ranging rulemaking proceeding in which it seeks comment on the regulatory ramifications of this classification.  Among the issues to be decided are whether the FCC should permit local authorities to impose an access requirement, whether local authorities should be prohibited from imposing fees on cable Internet service revenues, and what regulatory role local authorities should be permitted to play.  The outcome of this proceeding could have a material impact on our provision of cable Internet service.

          There are currently few laws or regulations which specifically regulate communications or commerce over the Internet. Section 230 of the Communications Act, added to that act by the 1996 Telecom Act, declares it to be the policy of the United States to promote the continued development of the Internet and other interactive computer services and interactive media, and to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by federal or state regulation. One area in which Congress did attempt to regulate content over the Internet involved the dissemination of obscene or indecent materials.  The provisions of the 1996 Telecom Act, generally referred to as the Communications Decency Act, were found to be unconstitutional, in part, by the United States Supreme Court in 1997.  In response, Congress passed the Child Online Protection Act.  The constitutionality of this act is currently being challenged in the courts.  In May 2002, the United States Supreme Court reversed the finding by the Third Circuit Court of Appeals that the use of “contemporary community standards” to identify material “harmful to minors “ was overly broad and therefore violative of the First Amendment.  The Supreme Court, however, remanded the matter to the Third Circuit to determine the validity of other challenges to the constitutionality of the Child Online Protection Act and kept the stay prohibiting government enforcement in place until further action by the lower courts. Finally, disclosure of customer communications or records is governed by the Electronic Communications Privacy Act of 2001 and the Cable Act, both of which were amended by the USA Patriot Act.

30

     Local Telecommunications Services

          The 1996 Telecom Act provides that no state or local laws or regulations may prohibit or have the effect of prohibiting any entity from providing any interstate or intrastate telecommunications service. States are authorized, however, to impose “competitively neutral” requirements regarding universal service, public safety and welfare, service quality and consumer protection. State and local governments also retain their authority to manage the public rights-of-way and may require fair and reasonable, competitively neutral and non-discriminatory compensation for management of the public rights-of-way when cable operators provide telecommunications service. State and local governments must publicly disclose required compensation from telecommunications providers for use of public rights-of-way.

          We have long-term agreements with Comcast Cable (formerly known as AT&T Broadband) that allow Comcast Cable to provide to customers all-distance telephone services using our network infrastructure and Comcast Cable’s switching and long distance transport facilities. Local telecommunications service is subject to regulation by state utility commissions. Use of local telecommunications facilities to originate and terminate long distance services, a service commonly referred to as “exchange access,” is subject to regulation both by the FCC and by state utility commissions. As a provider of local exchange service, Comcast Cable would be subject to the requirements imposed upon local exchange carriers by the 1996 Telecom Act and state law. These include requirements governing just and reasonable rates and practices, service quality, resale, telephone number portability, dialing parity, access to rights-of-way, reciprocal compensation, access for people with disabilities and truth-in-billing.  Although we do not provide telecommunications services, and are not currently regulated with regard to Comcast Cable’s provision of telecommunications services over our facilities, some states do regulate companies that own facilities over which telecommunications services are offered.  Therefore, there is a possibility that we could be subject to increased regulation in the future in the states where  we currently provide service, or if we expand into a state that already regulates companies that facilitate provision of telecommunications services.  Although, we cannot predict whether and the extent to which a state may seek to regulate us, increased regulation would likely increase our cost of doing business. 

Employees

          As of December 31, 2002, we employed approximately 3,200 full-time employees and 150 part-time employees. We consider our relations with our employees to be good.

Item 2.  Properties

	A cable television system consists of three principal operating components:
•	The first component, the signal reception processing and originating point called a “headend,” receives television, cable programming service, radio and data signals that are transmitted by means of off-air antennas, microwave relay systems and satellite earth systems. Each headend includes a tower, antennae or other receiving equipment at a location favorable for receiving broadcast signals and one or more earth stations that receives signals transmitted by satellite. The headend facility also houses the electronic equipment, which amplifies, modifies and modulates the signals, preparing them for passage over the system’s network of cables.
•	The second component of the system, the distribution network, originates at the headend and extends throughout the system’s service area. A cable system’s distribution network consists of microwave relays, coaxial or fiber optic cables placed on utility poles or buried underground and associated electronic equipment.

31

• The third component of the system is a “drop cable,” which extends from the distribution network into each customer’s home and connects the distribution system to the customer’s television set.

          We own and lease parcels of real property for signal reception sites which house our antenna towers and headends, microwave complexes and business offices which includes our principal executive offices. In addition, we own our cable systems’ distribution networks, various office fixtures, test equipment and service vehicles. The physical components of our cable systems require maintenance and periodic upgrading to keep pace with technological advances. We believe that our properties, both owned and leased, are in good condition and are suitable and adequate for our business operations as presently conducted and as proposed to be conducted.

Item 3.  Legal Proceedings

          Insight Kentucky and certain prior owners of the Kentucky systems, including affiliates of AT&T Broadband, have been named in class actions generally alleging that the Kentucky systems have improperly passed through state and local property tax charges to customers.  The plaintiffs in these actions seek monetary damages and the enjoinment of the collection of such taxes.  Such class actions are (i) Alfred P. Sykes, Jr., Charles Pearl, Linda Pearl vs. InterMedia Partners of Kentucky, L.P. and TCI TKR of Jefferson County, Inc., which was filed on March 26, 1999 in Jefferson County Circuit Court and consolidated with James F. Dooley vs. TCI TKR of Jefferson County and InterMedia Partners of Kentucky, L.P., which was filed on March 24, 1999 in Jefferson County Circuit Court, and (ii)Charles Shaw and Loretta Shaw vs. TCI TKR of Northern Kentucky, Inc. TCI TKR of Southern Kentucky, Inc., TCI Cablevision of North Central Kentucky, Inc., TCI Cablevision of Kentucky, Inc. and InterMedia Partners of Kentucky, L.P., which was filed on June 4, 1999 in the Franklin County Circuit Court.  We have entered into agreements with Plaintiffs’ counsel to settle these lawsuits, which received final court approval in December 2002.  The settlements will not have a material effect on our results of operations.

          The City of Louisville, Kentucky has granted additional franchises to Knology, Inc. and TotaLink of Kentucky, LLC.  Our Kentucky subsidiary’s franchise from the City of Louisville provides us with the right to challenge the grant of any subsequent franchises that are on terms more favorable than our own.  Pursuant to such franchise provision, we filed for declaratory judgment in the Jefferson County Circuit Court against the City of Louisville, Kentucky for its grant of a more favorable franchise to Knology on November 2, 2000, and to TotaLink on December 21, 2000.  In May 2002,TotaLink requested and was granted a repeal of their franchise.  The City of Louisville has been granted summary judgment in the Knology action on the basis that the franchise granted Knology was not more favorable than our own.  On October 24, 2002, we filed our appeal of such ruling and await a decision from the Court.

          On November 8, 2000, Knology filed a federal court action in the United States District Court for the Western District of Kentucky, naming Insight LP and our Kentucky operating subsidiary as defendants. The action also named the City of Louisville, Kentucky as a defendant.  The suit seeks money damages and injunctive relief for alleged violations of the antitrust laws, the Communications Act and the Civil Rights Act of 1866, arising out of our having filed, under provisions of our own franchise from the City, the state court challenge to Knology’s cable television franchise awarded by the City.  On December 20, 2000, we moved to dismiss the federal court action for failure to state a claim for relief and for being outside the jurisdiction of the federal court.  On the same date, Knology moved for a preliminary injunction “against” a provision of its franchise that suspends the franchise’s effectiveness during the pendency of our state court challenge.  The court denied our motion to dismiss and granted Knology the preliminary injunction effectively removing the stay of their franchise.  We believe we have substantial and meritorious defenses to the asserted federal claims and intend to defend the action vigorously.

32

          We believe there are no other pending or threatened legal proceedings that, if adversely determined, would have a material adverse effect on us.

Item 4.  Submission of Matters to a Vote of Security Holders

          None.

Item 4A.  Executive Officers of the Registrant

          The executive officers of the Registrant are as follows:

Name	Age	Position
Sidney R. Knafel	72	Chairman of the Board and Director
Michael S. Willner	50	Vice Chairman, Chief Executive Officer and Director
Kim D. Kelly	46	President, Chief Operating Officer and Director
Dinesh C. Jain	39	Senior Vice President and Chief Financial Officer
Elliot Brecher	37	Senior Vice President, General Counsel and Secretary

          Sidney R. Knafel has been Chairman of the Board since 1985. He was the founder, Chairman and an equity holder of Vision Cable Communications, Inc. from 1971 until its sale in 1981. Mr. Knafel is presently the managing partner of SRK Management Company, a private investment company, and also serves as Chairman of BioReliance Corporation, a biological testing company. He is a director of General American Investors Company, Inc. and IGENE Biotechnology, Inc., as well as several private companies. Mr. Knafel is a graduate of Harvard College and Harvard Business School.

          Michael S. Willner is a co-founder and has served as Chief Executive Officer since 1985.  Mr. Willner has also served as Vice Chairman since August 2002, and previously served as President from 1985.  Mr. Willner served as Executive Vice President and Chief Operating Officer of Vision Cable from 1979 through 1985, Vice President of Marketing for Vision Cable from 1977 to 1979 and General Manager of Vision Cable’s Bergen County, New Jersey cable television system from 1975 to 1977.   He is serving his second term as Chairman of the National Cable & Telecommunications Association’s Board of Directors and Executive Committee.  He also serves on the boards of C-SPAN, CableLabs and the Walter Kaitz Foundation.  Mr. Willner is a graduate of Boston University’s College of Communication and serves on the school’s Executive Committee.

          Kim D. Kelly has served as President since August 2002 and as Chief Operating Officer since January 1998.  She served as Executive Vice President from 1990, and served from then until January 2002 as Chief Financial Officer.  Since August 2002, she has also served as Chief Executive Officer of Insight Midwest.  She served from 1982 to 1990 with Marine Midland Bank, becoming its Senior Vice President in 1988, with primary responsibility for media lending activities. Ms. Kelly is Chairperson of the Cable Television Advertising Bureau’s Board of Directors.  She also serves as a member of the National Cable & Telecommunications Association Subcommittees for Telecommunications Policy, Diversity Initiatives and Accounting.  Ms. Kelly also serves as a director of Bank of New York Hamilton Funds, and serves on the boards of Cable in the Classroom and The Cable Center.  Ms. Kelly is a graduate of George Washington University.

          Dinesh C. Jain has served as Senior Vice President and Chief Financial Officer since January 2002.  Previously, Mr. Jain was employed for more than the past five years as a Managing Director of NTL, one of Europe’s leading cable and telecommunications companies.  His background in the cable

33

industry includes a nine-year period with OCOM Corporation and International CableTel, working in various key general management positions.  His roles have included Deputy Managing Director, NTL Consumer Group, as well as Managing Director of Cable and Wireless’ Consumer Division.

          Elliot Brecher has served as Senior Vice President and General Counsel since January 2000. Previously, he was associated with the law firm Cooperman Levitt Winikoff Lester & Newman, P.C., which served as our legal counsel until July 2000 when it merged with Sonnenschein Nath & Rosenthal, which continues to serve as our legal counsel.  He joined that firm in February 1994 and served as a partner from January 1996 until joining Insight. Prior to that, he was an associate of the law firm Rosenman & Colin from October 1988. Mr. Brecher received his law degree from Fordham University.

34

PART II

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

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

Quarter Ended	High		Low
March 31, 2001	$	28.938	$	21.000
June 30, 2001	$	28.160	$	18.000
September 30, 2001	$	27.150	$	17.180
December 31, 2001	$	24.580	$	17.570
March 31, 2002	$	24.490	$	18.600
June 30, 2002	$	21.039	$	9.380
September 30, 2002	$	12.730	$	6.430
December 31, 2002	$	14.770	$	6.920

          At February 28, 2003, there were approximately 234 and 24 stockholders of record of our Class A and Class B common stock. The number of Class A stockholders does not include beneficial owners holding shares through nominee names.

Dividend Policy

          We have never paid any cash dividends and intend, for the foreseeable future, to retain any future earnings for the development of our business. The terms of our indebtedness and the indebtedness of our subsidiaries restrict our ability to pay dividends. Our future dividend policy will be determined by the Board of Directors on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities.

Recent Sales of Unregistered Securities

          During the fourth quarter of 2002, we granted stock options to certain of our employees to purchase an aggregate of 905,000 shares of common stock and issued to an employee 450,000 restricted shares of common stock. The grants were not registered under the Securities Act of 1933 because the stock options either did not involve an offer or sale for purposes of Section 2(a)(3) of the Securities Act of 1933, in reliance on the fact that the stock options were granted for no consideration, or were offered and sold in transactions not involving a public offering, exempt from registration under the Securities Act of 1933 pursuant to Section 4(2).

Item 6.  Selected Financial Data

          In the following table, we provide you with our selected consolidated historical financial and other data.  We have prepared the consolidated selected financial information using our consolidated financial statements for the five years ended December 31, 2002. When you read this selected consolidated historical financial and other data, it is important that you read along with it the historical financial statements and related notes in our consolidated financial statements included in this report, as well as

35

 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” also included in this report.

          Under our franchise agreements, we are obligated to pay to local franchising authorities a percentage of our revenue derived from providing cable and other services the majority of which are passed through to customers.  We have historically recorded revenue net of franchise fees charged to our customers.  Staff Announcement D-103, issued by the FASB in November 2001, specifies that reimbursements received from a customer should be reflected as revenues and not as a reduction of expenses.  This Staff Announcement applies to financial reporting periods beginning after December 15, 2001.  Upon application of this Staff Announcement, comparative financial statements for prior periods are required to be reclassified to comply with the guidance in this Staff Announcement.  Consequently, we have reclassified the prior period amounts in the accompanying consolidated statements of operations to reflect franchise fees on a gross basis with reimbursements as revenue and payments as expense.  The effect on the prior period statements of operations was to increase both revenue and selling, general and administrative costs by $24.0 million, $13.0 million, $6.9 million and $2.0 million for each of the years ended December 31, 2001, 2000, 1999 and 1998.

          In addition, in accordance with the adoption of SFAS No. 142, beginning January 1, 2002, we no longer record amortization expense associated with franchise costs, goodwill and other indefinite lived intangible assets.  This change in accounting would have resulted in a net income (loss) of $(25.2) million, $(15.1) million, $(68.6) million and $142.5 million for each of the years ended December 31, 2001, 2000, 1999 and 1998.

36

		Year Ended December 31,
		2002			2001			2000			1999			1998
		(dollars in thousands, except per share data)
Statement of Operations Data:
Revenues		$	807,882		$	728,338		$	489,146		$	249,563		$	114,861
Operating costs and expenses:
	Programming and other operating costs		274,753			258,934			170,071			73,208			30,984
	Selling, general and administrative		173,505			153,003			104,974			60,816			25,822
	Non-recurring high-speed data charges		4,116			3,785			—			—			—
	Non-cash compensation and related charges		—			—			—			19,285			—
	Depreciation and amortization		216,506			383,449			236,242			131,308			43,849
Total operating costs and expenses			668,880			799,171			511,287			284,617			100,655
Operating income (loss)			139,002			(70,833	)		(22,141	)		(35,054	)		14,206
Other income (expense):
	Gain (loss) on cable systems exchange		—			34,178			(956	)		15,799			111,746
	Gain on contribution of cable systems to joint venture		—			—			—			—			44,312
	Interest expense		(204,730	)		(213,045	)		(115,524	)		(57,053	)		(31,817	)
	Interest income		2,126			7,315			5,771			6,655			3,711
	Other		(502	)		(2,320	)		(294	)		(345	)		(444	)
Total other income (expense)			(203,106	)		(173,872	)		(111,003	)		(34,944	)		127,508
Income (loss) before minority interest, investment activity and income taxes			(64,104	)		(244,705	)		(133,144	)		(69,998	)		141,714
Minority interest			31,076			141,314			67,773			31,339			3,410
Equity in losses of investees			—			(2,031	)		(3,830	)		(13,963	)		(3,251	)
Impairment write-down of investments			(18,023	)		(9,899	)		(88,554	)		—			—
Gain (loss) from early extinguishment of debt			3,560			(10,315	)		—			—			(3,267	)
Gain on sale of equity investments			—			—			80,943			—			—
Income (loss) before income taxes			(47,491	)		(125,636	)		(76,812	)		(52,622	)		138,606
Benefit (provision) for income taxes			(501	)		50,847			33,825			(31,586	)		—
Net income (loss)			(47,992	)		(74,789	)		(42,987	)		(84,208	)		138,606
Accrual of preferred interests			(20,107	)		(19,432	)		(18,725	)		—			—
Accretion of redeemable Class B common units			—			—			—			(7,118	)		(5,729	)
Net income (loss) attributable to common stockholders		$	(68,099	)	$	(94,221	)	$	(61,712	)	$	(91,326	)	$	132,877
Basic income (loss) per share attributable to common stockholders		$	(1.13	)	$	(1.57	)	$	(1.03	)	$	(2.58	)	$	6.55
Diluted income (loss) per share attributable to common stockholders			(1.13	)		(1.57	)		(1.03	)		(2.58	)		4.61

37

		Year Ended December 31,
		2002			2001			2000			1999			1998
		(dollars in thousands)
Other Financial Data:
	OCF  (1)	$	359,624		$	316,401		$	214,101		$	115,539		$	58,055
	OCF Margin  (2)		44.5	%		43.4	%		43.8	%		46.3	%		50.5
	Capital expenditures		283,004			325,581			262,241			135,929			44,794
	Net cash provided by operating activities		175,296			161,325			91,632			96,448			44,760
	Net cash used in investing activities		293,390			802,875			279,810			516,487			142,190
	Net cash provided by (used in) financing activities		(5,604	)		806,365			108,400			513,648			116,250
Balance Sheet Data:
	Cash and cash equivalents	$	74,850		$	198,548		$	33,733		$	113,511		$	19,902
	Property, plant and equipment, net		1,220,251			1,151,709			820,888			643,138			155,412
	Total assets		3,789,062			3,867,392			2,244,586			1,989,470			660,916
	Total debt, including preferred interests		2,772,824			2,728,189			1,552,804			1,233,000			573,663
	Partners’ (deficit)/stockholders’ equity		578,145			646,030			540,680			588,060			(7,928	)

		As of December 31, 2002, except where noted
		Indiana Systems			Kentucky Systems			Illinois Systems(3)			Ohio Systems			Managed Systems(4)			Total Systems
Technical Data:
	Network miles		8,700			9,300			7,700			2,600			3,400			32,000
	Number of headends		16			6			22			1			17			62
	Number of headends expected upon completion of upgrades during 2003  (5)		11			5			19			1			N/A			51
	Number of headends serving 95% of our customers expected upon completion of our upgrades (5)		3			4			6			1			N/A			14
Operating Data:
	Homes passed (6)		569,200			783,100			687,800			198,700			197,600			2,436,400
	Basic customers (7)		326,000			449,100			413,700			88,100			114,600			1,391,500
	Basic penetration (8)		57.3	%		57.4	%		60.2	%		44.3	%		58.0	%		57.1	%
	Digital ready homes (9)		299,300			446,700			395,400			81,700			17,100			1,240,200
	Digital customers (10)		77,000			143,400			82,800			29,400			2,800			335,400
	Digital penetration (11)		25.7	%		32.1	%		20.9	%		35.9	%		16.2	%		26.9	%
	Premium units (12)		131,500			233,800			188,100			64,400			29,600			647,400
	Premium penetration (13)		40.3	%		52.1	%		47.0	%		73.0	%		25.8	%		46.6	%
	Cable modem customers (14)		35,600			51,500			30,900			144,800			3,300			266,100

(1) Operating Cash Flow (“OCF”) represents operating income or loss before depreciation and amortization, non-recurring high-speed data costs and non-cash compensation and related charges.  We believe that OCF is commonly used in the cable television industry to analyze and compare cable television companies on the basis of operating performance, leverage and liquidity.  However, OCF is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than, either operating income or net income as an indicator of operating performance or cash flows as a measure of liquidity, as determined

38

	in accordance with accounting principles generally accepted in the United States.  Refer to our consolidated financial statements, including our consolidated statements of cash flows, which appear elsewhere in this report.
(2)	Represents operating cash flow a percentage of total revenues.
(3)	Does not include the Griffin, Georgia system which was sold to an affiliate of Comcast Cable on February 28, 2003.
(4)	Projections for capital expenditures related to managed system rebuilds are subject to approval by Comcast Cable.  Includes the New Albany and Shelbyville systems which we purchased from an affiliate of Comcast Cable on February 28, 2003.
(5)	The upgrades of the Illinois systems acquired in 2001 are scheduled to be substantially completed by mid-2003.
(6)	Homes passed are the number of single residence homes, apartments and condominium units passed by the cable distribution network in a cable system’s service area.
(7)	Basic customers are customers of a cable television system who receive a package of over-the-air broadcast stations, local access channels and certain satellite-delivered cable television services, other than premium services, and who are usually charged a flat monthly rate for a number of channels.
(8)	Basic penetration means basic customers as a percentage of total number of homes passed.
(9)	Digital ready homes means the total number of homes passed to which digital service is available.
(10)	Customers with a digital converter box.
(11)	Digital penetration means digital service units as a percentage of digital ready homes.
(12)	Premium units mean the number of subscriptions to premium services, which are paid for on an individual unit basis.
(13)	Premium penetration means premium service units as a percentage of the total number of basic customers. A customer may purchase more than one premium service, each of which is counted as a separate premium service unit. This ratio may be greater than 100% if the average customer subscribes to more than one premium service unit.
(14)	Customers receiving high-speed Internet service.

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

Introduction

          On July 17, 2000, we entered into a ten-year agreement with AT&T Broadband (now known as Comcast Cable) that allows Comcast Cable to provide telephone services using our network infrastructure and Comcast Cable’s switching and transport facilities.

39

          On August 8, 2000, we completed the purchase of the remaining 25% common equity interest in Insight Ohio which we previously did not own.  At the same time, the Insight Ohio operating agreement was amended to provide us with 70% of its total voting power.  As such, the results of Insight Ohio have been consolidated in our results for the years ended December 31, 2002, 2001 and 2000.  Prior to 2000, we accounted for our 75% non-voting common equity interest in Insight Ohio which we acquired in August 1998 under the equity method.

           On January 5, 2001 (effective January 1, 2001), we completed a series of transactions with certain cable subsidiaries of AT&T Corp. that increased by 355,000 the number of customers we serve.  We refer in this report to these transactions, including related bank financing, as the “AT&T transactions.” Specifically, Insight Midwest acquired:

• all of our systems not already owned by Insight Midwest, including Insight Ohio, serving approximately 175,000 customers, as well as systems which we acquired from the AT&T cable subsidiaries serving approximately 105,000 customers; and

• systems from the AT&T cable subsidiaries located in Illinois serving approximately 250,000 customers.

          Insight Midwest financed the acquisition of the systems from us and the AT&T cable subsidiaries by borrowing $685.0 million under the Midwest Holdings credit facility.

Results of Operations

          Revenues are earned from customer fees for cable television programming services including premium, digital and pay-per-view services and ancillary services, such as rental of converters and remote control devices, installations and from selling advertising.  In addition, we earn revenues from providing high-speed data services and from facilitating the delivery of telephone services as well as from commissions for products sold through home shopping networks and management fees.

          Under our franchise agreements, we are obligated to pay to local franchising authorities a percentage of our revenue derived from providing cable and other services the majority of which are passed through to customers.  We have historically recorded revenue net of franchise fees charged to our customers.  Staff Announcement D-103, issued by the FASB in November 2001, specifies that reimbursements received from a customer should be reflected as revenues and not as a reduction of expenses.  This Staff Announcement applies to financial reporting periods beginning after December 15, 2001.  Upon application of this Staff Announcement, comparative financial statements for prior periods are required to be reclassified to comply with the guidance in this Staff Announcement.  Consequently, we have reclassified the prior period amounts in the accompanying consolidated statements of operations to reflect franchise fees on a gross basis with reimbursements as revenue and payments as expense.  The effect on the prior period statements of operations was to increase both revenue and selling, general and administrative costs by $24.0 million for the year ended December 31, 2001 and $13.0 million for the year ended December 31, 2000.

          We have generated increases in revenues and Operating Cash Flow for each of the past three fiscal years, primarily through a combination of acquisitions, internal customer growth, increases in monthly revenue per customer and growth in advertising and increasingly new revenue from selling new

40

services including high-speed data access and interactive digital video.

          As a result of our March 14, 2002 purchase of the remaining 50% equity interest in SourceSuite, LLC, we now own 100% of SourceSuite’s equity interests.  As such, the operating results of SourceSuite have been consolidated in the accompanying financial statements effective January 1, 2002. During 2001, we accounted for our 50% interest in SourceSuite under the equity method.

          Some of the principal reasons for our net losses through December 31, 2001 include depreciation and amortization associated with our acquisitions and capital expenditures related to the construction and upgrading of our systems, and interest costs on borrowed money.  Beginning January 1, 2002, we no longer record amortization expense associated with goodwill and franchise costs; however, we expect to continue to report net losses for the foreseeable future.  We cannot predict what impact, if any, continued losses will have on our ability to finance our operations in the future.

          The following table is derived for the periods presented from our consolidated financial statements that are included in this report and sets forth certain statement of operations data for our consolidated operations:

		Year ended December 31,
		2002			2001			2000
		(In thousands)
Revenue		$	807,882		$	728,338		$	489,146
Operating costs and expenses:
	Programming and other operating costs		274,753			258,934			170,071
	Selling, general and administrative		173,505			153,003			104,974
	Non-recurring high-speed data service charges		4,116			3,785			—
	Depreciation and amortization		216,506			383,449			236,242
Total operating costs and expenses			668,880			799,171			511,287
Operating income (loss)			139,002			(70,833	)		(22,141	)
Operating cash flow			359,624			316,401			214,101
Interest expense			204,730			213,045			115,524
Income tax benefit (provision)			(501	)		50,847			33,825
Net loss			(47,992	)		(74,789	)		(42,987	)
Net cash provided by operating activities			175,296			161,325			91,632
Net cash used in investing activities			293,390			802,875			279,810
Net cash provided by (used in) financing activities			(5,604	)		806,365			108,400

          Operating Cash Flow (“OCF”) represents operating income or loss before depreciation and amortization and non-recurring high-speed data costs.  We believe that OCF is commonly used in the cable television industry to analyze and compare cable television companies on the basis of operating performance, leverage and liquidity.  However, OCF is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than, either operating income or net income as an indicator of operating performance or cash flows as a measure of liquidity, as determined in accordance with accounting principles generally accepted in the United States.  Refer to our consolidated financial statements, including our consolidated statements of cash flows, which appear elsewhere in this report.

41

The following calculations of OCF are not necessarily comparable to similarly titled amounts of other companies:

		Year ended December 31,
		2002		2001			2000
		(in thousands)
Operating income (loss)		$	139,002	$	(70,833	)	$	(22,141	)
Adjustments:
	Depreciation and amortization		216,506		383,449			236,242
	Non-recurring high-speed data costs		4,116		3,785			—
Operating Cash Flow		$	359,624	$	316,401		$	214,101

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

          Revenue increased $79.5 million or 11% to $807.9 million for the year ended December 31, 2002 from $728.3 million for the year ended December 31, 2001.  The increase in revenue was primarily the result of gains in our high-speed data and digital services with revenue increases over the prior year period of 65% and 40%.  In addition, our basic cable service revenue increased primarily due to basic cable rate increases. 

          Revenue by service offering were as follows for the years ended December 31, (in thousands):

	2002					2001
	Revenue by Service Offering		% of Total Revenue			Revenue by Service Offering		% of Total Revenue
Basic	$	506,128		62.6	%	$	474,995		65.2	%
Digital		66,124		8.2	%		47,134		6.5	%
High-speed data		58,968		7.3	%		35,825		4.9	%
Premium		58,934		7.3	%		57,625		7.9	%
Analog pay-per-view		1,415		.2	%		4,102		.6	%
Advertising sales		53,415		6.6	%		46,907		6.4	%
Franchise fees		25,762		3.2	%		23,959		3.3	%
Other		37,136		4.6	%		37,791		5.2	%
Total	$	807,882		100.0	%	$	728,338		100.0	%

          RGUs (Revenue Generating Units) were approximately 1,798,900 as of December 31, 2002 compared to approximately 1,640,200 as of December 31, 2001.  This represents a growth rate of 10%.  RGUs represent the sum of basic, digital, high-speed data and telephone customers.

          Average monthly revenue per basic customer, including management fee income and SourceSuite revenue, was $52.11 for the year ended December 31, 2002 compared to $47.49 for the year ended December 31, 2001, primarily reflecting the continued successful rollout of new product offerings in all markets.  Average monthly revenue per basic customer for high-speed data and interactive digital video increased to $8.07 for the year ended December 31, 2002 from $5.41 for the year ended December 31, 2001.

          Programming and other operating costs increased $15.9 million or 6% to $274.8 million for the year ended December 31, 2002 from $258.9 million for the year ended December 31, 2001.  The increase

42

in programming and other operating costs was primarily the result of increased programming rates for our classic and digital service as well as for additional programming added in rebuilt systems offset by decreases in high-speed data costs.  Programming costs increased 11% for the year ended December 31, 2002 as compared to the year ended December 31, 2001.

          Selling, general and administrative expenses increased $20.5 million or 13% to $173.5 million for the year ended December 31, 2002 from $153.0 million for the year ended December 31, 2001.  The increase in selling, general and administrative expenses was primarily the result of increased customer service and insurance costs partially offset by a decrease in marketing costs.

          On September 28, 2001, At Home Corporation (“@ Home”), the former provider of high-speed data services for all of our systems except for those located in Ohio, filed for protection under Chapter 11 of the Bankruptcy Code.  For the purpose of continuing service to existing customers and to resume the provisioning of service to new customers, we entered into an interim agreement with @ Home to extend service through November 30, 2001.  Further, in December 2001, we entered into an additional interim service arrangement whereby we paid $10.0 million to @ Home to extend service for three months through February 28, 2002, which was recorded as expense ratably over this three-month period.

          As a result of these interim arrangements we incurred approximately $2.8 million in excess of our original agreed-to cost for such services rendered during the year ended December 31, 2001.  Additionally, as of December 31, 2001, we recorded an allowance for bad debt of $1.0 million for a net receivable from @ Home in connection with monies @ Home collected from our high-speed data customers on our behalf prior to September 28, 2001.  Additionally, we incurred approximately $4.1 million in excess of our original agreed-to cost for such services rendered during the three months ended March 31, 2002.  These additional costs are included in non-recurring high-speed data service charges in our statement of operations.

          Depreciation and amortization expense decreased $166.9 million or 44% to $216.5 million for the year ended December 31, 2002 from $383.4 million for the year ended December 31, 2001.  The decrease in depreciation and amortization expense was primarily the result of ceasing the amortization of goodwill and indefinite lived intangible assets associated with the adoption of SFAS No. 142, effective January 1, 2002.  This was partially offset by an $11.1 million write-down of the carrying value of current video-on-demand equipment, which was replaced as of December 31, 2002 in connection with our transition to a new video-on-demand service provider.

          OCF increased $43.2 million or 14% to $359.6 million for the year ended December 31, 2002 from $316.4 million for the year ended December 31, 2001.  This increase was primarily due to increased digital and high-speed data revenue, partially offset by increases in programming and other operating costs and selling, general and administrative costs.

          Interest expense decreased $8.3 million or 4% to $204.7 million for the year ended December 31, 2002 from $213.0 million for the year ended December 31, 2001.  This decrease was the result of lower interest rates, which averaged 7.9% for the year ended December 31, 2002, compared to 8.7% for the year ended December 31, 2001, partially offset by higher outstanding debt.

          For the year ended December 31, 2002, the net loss was $48.0 million primarily for the reasons set

43

forth above.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

          Revenue increased $239.2 million or 49% to $728.3 million for the year ended December 31, 2001 from $489.1 million for the year ended December 31, 2000.  The increase in revenue was primarily the result of the Illinois cable systems acquired from AT&T in the AT&T transactions (the “AT&T Illinois Systems”).  The incremental revenue generated by the acquisition of the AT&T Illinois Systems approximated $190.2 million, which represents 79.5% of the increase in consolidated revenue.  Excluding the AT&T Illinois Systems, revenue increased 10% largely due to the sale of new services, and revenue for digital and high-speed data increased by $34.6 million, a combined 133% growth rate.

          Revenue by service offering were as follows for the years ended December 31, (in thousands):

	2001 Revenue by Service Offering		% of Total Revenue			2000 Revenue by Service Offering			% of Total Revenue
Basic	$	474,995		65.2	%		$	329,721		67.4	%
Digital		47,134		6.5	%			15,811		3.2	%
High-speed data		35,825		4.9	%			10,314		2.1	%
Premium		57,625		7.9	%			46,402		9.5	%
Analog pay-per-view		4,102		.6	%			6,830		1.4	%
Advertising sales		46,907		6.4	%			34,934		7.1	%
Franchise fees		23,959		3.3	%			12,960		2.7	%
Other		37,791		5.2	%			32,174		6.6	%
Total	$	728,338		100.0	%		$	489,146		100.0	%

          On a pro forma basis including the AT&T Illinois Systems, RGUs were approximately 1,635,300 as of December 31, 2001 compared to approximately 1,485,200 as of December 31, 2000.  This represents an annualized growth rate of 10%.

          Average monthly revenue per basic customer, including management fee income, was $47.49 for the year ended December 31, 2001 compared to $44.09 for the year ended December 31, 2000 primarily reflecting the continued successful rollout of new product offerings in the Indiana, Kentucky and Ohio markets.  Average monthly revenue per basic customer for high-speed data and interactive digital video increased to $5.41 for the year ended December 31, 2001 from $2.36 for the year ended December 31, 2000.  Excluding the AT&T Illinois Systems, the number of high-speed data service customers increased to approximately 62,900 as of December 31, 2001 from approximately 30,300 as of December 31, 2000, while digital customers increased to approximately 208,000 as of December 31, 2001 from approximately 103,300 as of December 31, 2000.

          Programming and other operating costs increased $88.9 million or 52% to $258.9 million for the year ended December 31, 2001 from $170.1 million for the year ended December 31, 2000.  The increase in programming and other operating costs was primarily the result of the acquisition of the AT&T Illinois Systems.  The incremental expense resulting from the AT&T Illinois Systems approximated $62.8 million,

44

which represents 71% of the increase in programming and other operating costs.  Excluding these systems, programming and other operating costs increased by approximately $26.1 million or 15%, primarily as a result of increased programming rates and additional programming.

          Selling, general and administrative expenses increased $48.0 million or 46% to $153.0 million for the year ended December 31, 2001 from $105.0 million for the year ended December 31, 2000.  The increase in selling, general and administrative expenses was primarily the result of the acquisition of the AT&T Illinois Systems.  The incremental expense resulting from the AT&T Illinois systems approximated $36.5 million, which represents 76% of the increase.  Excluding these systems, selling, general and administrative costs increased by approximately $11.5 million or 11%, primarily reflecting increased marketing activity and corporate expenses associated with new service introductions.

          Non-recurring high-speed data service charges were incurred in the year ended December 31, 2001 as a result of payments made to @ Home.  For the purpose of continuing service to existing customers and to resume the provisioning of service to new customers, we entered into an interim agreement with @ Home to extend service through November 30, 2001.  Further, in December 2001, we entered into an additional interim service arrangement whereby we paid $10.0 million to @ Home to extend service for three months through February 28, 2002 that is being recorded into expense ratably over the three-month period.  As a result of these interim arrangements we incurred approximately $2.8 million in excess of our original agreed-to cost for such services rendered during the year ended December 31, 2001.  Additionally, we have recorded an allowance for bad debt of $1.0 million for a net receivable from @ Home in connection with monies @ Home collected from our high-speed data customers on our behalf prior to September 28, 2001.  These additional costs are included in non-recurring high-speed data service charges in our statement of operations.

          Depreciation and amortization expense increased $147.2 million or 62% to $383.4 million for the year ended December 31, 2001 from $236.2 million for the year ended December 31, 2000.  The increase in depreciation and amortization expense was primarily the result of the acquisition of the AT&T Illinois Systems.  The incremental expense resulting from the AT&T Illinois Systems approximated $96.4 million, which represents 65% of the increase.  Excluding these systems, depreciation and amortization expense increased by approximately $50.8 million or 21.5%, primarily due to capital expenditures made to rebuild our existing cable equipment, roll-out new product offerings and add telephony capabilities to our network.

          OCF increased $102.3 million or 48% to $316.4 million for the year ended December 31, 2001 from $214.1 million for the year ended December 31, 2000.  This increase was primarily due to the results generated by the AT&T Illinois Systems.

          Interest expense increased $97.5 million or 84% to $213.0 million for the year ended December 31, 2001 from $115.5 million for the year ended December 31, 2000.  The increase in interest expense was primarily the result of higher outstanding debt resulting from the acquisition of the AT&T Illinois Systems and funding of capital expenditures during the past year offset by lower average interest rates.

          The benefit for income taxes was $46.6 million and $33.8 million for the year ended December 31, 2001 and 2000, representing effective tax rates of 40% and 44%. 

          For the year ended December 31, 2001, the net loss was $74.8 million primarily for the reasons set

45

forth above.

Liquidity and Capital Resources

          Our business requires cash for operations, debt service, capital expenditures and acquisitions.  The cable television business has substantial on-going capital requirements for the construction, expansion and maintenance of its broadband networks.  Expenditures have been made for various purposes including the upgrade of our existing cable network, and in the future will be used for network extensions, new services, converters and network upgrades.  Historically, we have been able to meet our cash requirements with cash flow from operations, borrowings under our credit facilities and issuances of private and public debt and equity.

          Cash provided by operations for the years ended December 31, 2002 and 2001 was $175.3 million and $161.3 million.  The increase was primarily attributable to the timing of cash receipts and payments related to working capital accounts.

          Cash used in investing activities for the years ended December 31, 2002 and 2001 was $293.4 million and $802.9 million.  The decrease was primarily attributable to the absence of significant acquisitions of cable television systems and reduced capital expenditures in 2002.

          Cash provided by (used in) financing activities for the years ended December 31, 2002 and 2001 was $(5.6) million and $806.4 million.  The change was primarily attributable to lower net borrowings from credit facilities in 2002 related to the absence of significant cable television system acquisitions.

          For the years ended December 31, 2002 and 2001, we spent $283.0 million and $325.6 million in capital expenditures largely to support our plant rebuild in Illinois, which is expected to be substantially complete by mid-2003, telephone deployment and success-based capital including interactive digital and high-speed data expansion.  For the year ending December 31, 2003, it is anticipated that we will spend approximately $220.0 million on capital expenditures.

          We have concluded a number of financing transactions, which fully support our operating plan.  These transactions are detailed as follows:

          On October 1, 1999, in connection with the formation of Insight Midwest and our acquisition of a 50% interest in the Kentucky systems, Insight Midwest completed an offering of $200.0 million principal amount of its 9 ¾% senior notes due 2009.   The net proceeds of the offering were used to repay certain outstanding debt of the Kentucky systems.  On November 6, 2000, Insight Midwest completed an offering of $500.0 million principal amount of its 10 ½% senior notes due 2010.  The net proceeds of the offering of $486.0 million were used to repay a portion of the Indiana and Kentucky credit facilities.  Interest on the Insight Midwest 9 ¾% senior notes is payable on April 1 and October 1 of each year and interest on the Insight Midwest 10 ½% senior notes is payable on May 1 and November 1 of each year.  The indentures relating to these senior notes impose certain limitations on the ability of Insight Midwest to, among other things, incur debt, make distributions, make investments and sell assets.

          On January 5, 2001, we consummated the AT&T transactions with the AT&T cable subsidiaries.  As a result of these AT&T transactions, the number of customers served by us increased by 355,000.  In

46

conjunction with the AT&T transactions, a subsidiary of Insight Midwest, Insight Midwest Holdings, LLC, which subsidiary serves as a holding company for all of Insight Midwest’s systems other than the Columbus, Ohio system, consummated on January 5, 2001 a $1.75 billion credit facility from which it borrowed $663.0 million to repay the Indiana and Kentucky credit facilities and $685.0 million to finance the AT&T transactions.

          The Midwest Holdings credit facility permits the distribution of cash from Midwest Holdings’ subsidiaries to enable Insight Midwest to pay interest on its 9¾% senior notes and 10½% senior notes, so long as there exists no default under the credit facility.  The Midwest Holdings credit facility contains covenants restricting, among other things, the ability of Midwest Holdings and its subsidiaries to acquire or dispose of assets, make investments and engage in transactions with related parties.  The facility also requires compliance with certain financial ratios and contains customary events of default.  As of December 31, 2002, we were in compliance with the Midwest Holdings credit facility’s covenant requirements.  Given current operating conditions and projected results of operations, we anticipate continued compliance under this credit facility for the foreseeable future.

          Insight Midwest acquired all of the common equity interests of Insight Ohio as part of the AT&T transactions.  Insight Ohio is an unrestricted subsidiary under the indentures governing our and Insight Midwest’s notes, and is prohibited by the terms of its indebtedness from making distributions to Insight Midwest.  Insight Ohio has a $25.0 million reducing revolving credit facility that supports the Ohio system.  The facility requires principal payments commencing in March 2003 through September 2004.  As of December 31, 2002, $25.0 million was outstanding under this credit facility.  Given current operating conditions and projected results of operations, we anticipate full compliance with this credit facility agreement for the foreseeable future.

          Insight Holdings of Ohio LLC, a wholly owned subsidiary of Insight Midwest, owns 100% of the common equity of Insight Ohio and Coaxial Communications of Central Ohio, Inc. owns 100% of the preferred equity of Insight Ohio.  Such common and preferred equity was issued in August 1998 as part of a financing plan which resulted in (i) Coaxial Communications contributing the Ohio system to Insight Ohio, (ii) Coaxial Communications and Phoenix Associates, an affiliate of Coaxial Communications, issuing $140.0 million principal amount of 10% senior notes due 2006, (iii) Coaxial LLC and Coaxial Financing Corp., an affiliate of Coaxial LLC, issuing $55.9 million principal amount at maturity of 12 7/8% senior discount notes due 2008 and (iv) the Coaxial 10% senior notes and the Coaxial 12 7/8% senior discount notes being conditionally guaranteed by Insight Ohio.

          Interest on the Coaxial 10% senior notes is payable on February 15 and August 15 of each year.  The indenture governing the Coaxial 10% senior notes imposes certain limitations on the ability of Coaxial Communications, Phoenix and Insight Ohio to, among other things, incur debt, make distributions, make investments and sell assets. Interest on the Coaxial 12 7/8% senior discount notes does not accrue and is not payable prior to August 15, 2003.  Thereafter, cash interest on the Coaxial 12 7/8% senior discount notes will be payable on February 15 and August 15 of each year, commencing on February 15, 2004.  The indenture governing the Coaxial 12 7/8% senior discount notes imposes certain limitations on the ability of Coaxial LLC, Coaxial Financing, Coaxial Communications and Insight Ohio to, among other things, incur debt, make distributions, make investments and sell assets.  The ability of Coaxial to make scheduled payments with respect to the 10% senior notes and 12 7/8% senior discount notes will depend on the financial and operating performance of Insight Ohio. The distributions on the Series A and B Preferred

47

Interests equal the interest payments on the senior notes and senior discount notes.

          On February 6, 2001, we completed an offering of $400.0 million principal amount at maturity of 12 ¼% senior discount notes due 2011.  These notes were issued at a discount to their principal amount at maturity resulting in gross proceeds to us of approximately $220.1 million.  We utilized approximately $20.2 million of the proceeds to repay the outstanding amount of our inter-company loan from Insight Midwest, which we incurred in connection with the financing of the AT&T transactions.  We intend to use the remaining proceeds for general corporate purposes, including joint ventures and/or strategic acquisitions.  No cash interest on the discount notes will accrue prior to February 15, 2006.  Thereafter, cash interest on the discount notes will accrue and be payable on February 15 and August 15 of each year, commencing August 15, 2006.  The initial accreted value of the discount notes of approximately $220.1 million will increase until February 15, 2006 such that the accreted value will equal the principal amount on February 15, 2006.

          On April 18, 2002, we entered into an amendment to the Insight Midwest Holdings credit facility which delayed by six months the scheduled reduction to the leverage ratio covenant to allow Insight Midwest Holdings more financing flexibility, and increased the aggregate amount that can be distributed to Insight Midwest for the purpose of making investments in Insight Ohio.  Previously, on March 28, 2002, we loaned $100.0 million to Insight Midwest to lower our effective interest rates, $97.0 million of which was contributed to Insight Midwest Holdings on April 18, 2002 for use in paying down the credit facility balance and in funding financing costs associated with the amendments, and $3.0 million of which was contributed to Insight Ohio on March 28, 2002.  On June 6, 2002, a further amendment to the credit facility was entered into which permits distributions by Insight Midwest Holdings to Insight Midwest for the purpose of repaying our $100.0 million loan so long as there is no default under the Midwest Holdings credit facility.  The loan to Insight Midwest bears annual interest of 9%, has a scheduled maturity date of January 31, 2011 and permits prepayments.

          On December 17, 2002 Insight Midwest completed a $185.0 million add-on offering under the 9¾% senior notes indenture.  Insight Midwest received proceeds of $176.9 million, including $3.8 million of interest accruing from October 1, 2002 through the date of issuance that will be repaid to holders of the bonds in the first semi-annual interest payment due on April 1, 2003, and net of an underwriting fee of $3.1 million and reflects a bond discount of $8.8 million that is being amortized through October 2009.  The proceeds of this offering were used to repay a portion of the outstanding revolving loans under the Midwest Holdings Credit Facility.  Since this add-on offering occurred under the 9¾% senior notes indenture, these additional debt securities and the previous 9¾% senior notes are considered a single series of senior notes with identical terms.

         On December 18, 2002 we repurchased $40.0 million face amount of the 12¼% senior discount notes at the then accreted value of $27.4 million for $23.2 million, resulting in a gain of $3.6 million, net of the write-off of unamortized deferred financing costs of $616,000.  As of December 31, 2002, the outstanding principal and accreted amounts of these notes were $360.0 million and $247.4 million. 

          We have a substantial amount of debt.  Our high level of debt could have important consequences for you.  Our investments in our operating subsidiaries, including Insight Midwest, constitute substantially all of our operating assets.  Consequently, our subsidiaries conduct all of our consolidated operations and own substantially all of our operating assets.  Our principal source of cash is derived from our subsidiaries’

48

operations and borrowings which we use to pay our obligations.  Our ability to access the cash flow of our subsidiaries may be contingent upon our ability to refinance the debt of our subsidiaries.

          We believe that the Midwest Holdings credit facility, cash on-hand and our cash flow from operations are sufficient to support our current operating plan.  We have the ability to draw upon the $312.0 million of unused availability under the Midwest Holdings Credit Facility as of December 31, 2002 to fund any shortfall resulting from the inability of our cash from operations to fund our capital expenditures, meet our debt service requirements or otherwise fund our operations.

          The following table summarizes our contractual obligations and commitments, excluding interest, preferred dividends and commitments for programming, as of December 31, 2002, including periods in which the related payments are due (in thousands):

	Long-Term Debt		Preferred Interests		Operating Leases		Total
2003	$	5,000	$	—	$	4,185	$	9,185
2004		80,000		—		3,437		83,437
2005		81,250		—		2,798		84,048
2006		81,250		140,000		2,449		223,699
2007		81,250		—		1,952		83,202
Thereafter		2,379,250		55,869		4,286		2,439,405
Total cash obligations	$	2,708,000	$	195,869	$	19,107	$	2,922,976

Recent Accounting Pronouncements

          In May 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”.  SFAS No. 145 eliminates the requirement under SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, to report gains and losses from extinguishments of debt as extraordinary items in the income statement.  Accordingly, gains or losses from extinguishments of debt for fiscal years beginning after May 15, 2002 shall not be reported as extraordinary items unless the extinguishment qualifies as an extraordinary item under the provisions of APB Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions”.  Upon adoption of this pronouncement, any gain or loss on extinguishment of debt previously classified as an extraordinary item in prior periods presented that does not meet the criteria of APB Opinion No. 30 for such classification should be reclassified to conform to the provisions of SFAS No. 145.  In connection with our adoption of this pronouncement on December 31, 2002, we reclassified a loss from early extinguishment of debt of $10.3 million, ($6.1 million net of tax), recorded during the year ended December 31, 2001 and a gain of $3.6 million recorded during the year ended December 31, 2002, to results from continuing operations.

          In June 2002, the FASB issued SFAS No. 146, “Accounting for Disposal Obligations”, which became effective for us beginning January 1, 2003.  SFAS No. 146 supersedes EITF Issue No. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”.  SFAS No. 146 addresses the accounting for and disclosure of costs to terminate an existing contractual obligation (including but not limited to operating

49

leases), incremental direct and other costs associated with the related disposal activity and termination benefits (severance pay) provided to employees pursuant to a one-time benefit arrangement that does not constitute a preexisting or newly-created ongoing benefit plan.  The adoption of SFAS No. 146 had no impact on our consolidated financial position or results of operations.

          In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure”, which amends SFAS No. 123, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method used on reported results.  The disclosure provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002 and have been incorporated into the financial statements and accompanying footnotes included in this Form 10-K.

Critical Accounting Policies

          The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our consolidated financial statements.  We evaluate our estimates and judgments on an on-going basis.  We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances.  Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may vary from what we anticipate and different assumptions or estimates about the future could change our reported results.  We believe the following accounting policies are the most critical to us, in that they are important to the portrayal of our financial statements and they require our most difficult, subjective or complex judgments in the preparation of our consolidated financial statements.

          Fair Value of Assets Acquired and Liabilities Assumed in Purchase Combinations

          The purchase combinations carried out by us require management to estimate the fair value of the assets acquired and liabilities assumed in the combinations.  These estimates of fair value are based on our business plan for the entities acquired including planned redundancies, restructuring, use of assets acquired and assumptions as to the ultimate resolution of obligations assumed for which no future benefit will be received.  We also utilize appraisal reports issued by independent appraisers.  Should actual use of assets or resolution of obligations differ from our estimates, revisions to the estimated fair values would be required.  If a change in estimate occurs after one year of the acquisition, the change would be recorded in our statement of operations.

          Goodwill and Other Identifiable Intangibles

          We assess the impairment of goodwill and other indefinite-lived intangible assets annually and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  Some factors we consider important which could trigger an impairment review include the following:

• Significant underperformance relative to expected historical or projected future operating results;

50

• Significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and

• Significant negative industry or economic trends.

          When we determine that the carrying value of goodwill and other indefinite-lived intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.  With the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets,” on January 1, 2002 we ceased amortizing goodwill and franchise costs arising from acquisitions.  In lieu of amortization, we perform an annual impairment analysis.  If we determine through the impairment review process that goodwill has been impaired, we would record an impairment charge in our statement of operations.

        Investments

          Periodically, we make strategic investments.  All marketable securities are classified as available-for-sale securities and are carried at fair value.  All other equity investments are carried at cost.  Each quarter, we assess the value of these investments by using information acquired from industry trends, the management of these companies and other external sources.  Based on the information acquired, we record an impairment charge when we believe an investment has experienced a decline in value that is other than temporary.  Future adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment’s current carrying value, thereby possibly requiring an impairment charge in the future.

        Fixed Assets

          Fixed assets include costs capitalized for labor and overhead incurred in connection with the installation of cable systems and is stated at cost.  Depreciation for buildings, cable system equipment, furniture, fixtures and office equipment is calculated using the straight-line method over estimated useful lives ranging from 2 to 30 years.  Building improvements are amortized using the straight-line method over shorter of the remaining terms of the leases or the estimated lives of the improvements.

Risk Factors

          We have substantial debt and have significant interest payment requirements, which may adversely affect our ability to obtain financing in the future to finance our operations and our ability to react to changes in our business.

        We have a substantial amount of debt. The following table shows certain important credit statistics about us.

	As of December 31, 2002
		(dollars in thousands)
Total debt, including preferred interests	$	2,772,824
Stockholders’ equity		578,145
Debt to equity ratio		4.8x

51

     Our high level of combined debt could have important consequences for you, including the following:

• Our ability to obtain additional financing in the future for capital expenditures, acquisitions, working capital or other purposes may be limited;

• We will need to use a large portion of our revenues to pay interest on our borrowings, which will reduce the amount of money available to finance our operations, capital expenditures and other activities;

• Some of our debt has a variable rate of interest, which exposes us to the risk of increased interest rates; and

• Our indebtedness may limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions.

     Our primary asset is a 50% stake in Insight Midwest, and our sole business is the management of Insight Midwest’s cable television systems. We may be forced to liquidate Insight Midwest before our 12 ¼% senior discount notes mature.

          Although our financial statements consolidate the results of Insight Midwest, we own only 50% of the outstanding partnership interests in Insight Midwest. The other 50% of Insight Midwest is owned by an indirect subsidiary of Comcast Corporation, an entity over which we have no control. As a result, although our financial statements include 100% of the revenues and Operating Cash Flow of Insight Midwest, we are only entitled to share in the results and assets of Insight Midwest to the extent of our partnership interest. Insight Midwest accounted for substantially all of our revenues and Operating Cash Flow in fiscal 2002. Our 50% interest in Insight Midwest constitutes substantially all of our operating assets.  The only cash we receive directly from Insight Midwest is a management fee of 3% based on revenues of the cable television systems and reimbursement of expenses.

          The Insight Midwest partnership agreement provides that at any time after December 31, 2005 either Comcast Cable or Insight LP (our wholly-owned subsidiary that owns our 50% interest in Insight Midwest) will have the right to cause a split-up of Insight Midwest, subject to a limited right of postponement held by the non-initiating partner. The split-up would reduce the cash flow from operations that we need to repay our debt, and could require us to make a change of control offer which we may be unable to finance.

     We depend upon our operating subsidiaries for cash to fund our obligations.

          Our investments in our operating subsidiaries, including Insight Midwest, constitute substantially all of our operating assets. Consequently, our subsidiaries conduct all of our consolidated operations and own substantially all of our consolidated assets. The principal source of the cash we need to pay our obligations is the cash that our subsidiaries generate from their operations and their borrowings. The ability of our operating subsidiaries to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.  Accordingly, we cannot assure you that our subsidiaries will generate cash flow from operations in amounts sufficient to enable us to pay our indebtedness.

52

     Our ability to access the cash flow of our subsidiaries may be contingent upon our ability to refinance the debt of our subsidiaries, and we may be required to refinance certain indebtedness prior to maturity.

          Our subsidiaries’ ability to make payments to us will depend upon their operating results. Insight Midwest’s ability to receive cash from its subsidiaries is restricted by the terms of the Midwest Holdings credit facility. The Midwest Holdings credit facility permits Midwest Holdings’ subsidiaries to distribute cash to Insight Midwest, but only so long as there is no default under such credit facility. The terms of its indebtedness prohibit Insight Ohio from making distributions to Insight Midwest.

          Even if Insight Midwest receives funds from its subsidiaries, there can be no assurance that Insight Midwest can or would distribute cash to us to make payments on the notes due to restrictions imposed by the indentures governing Insight Midwest’s outstanding senior notes and the Insight Midwest partnership agreement. The indentures governing Insight Midwest’s outstanding 10 ½% senior notes and 9 ¾% senior notes limit Insight Midwest’s ability to distribute cash to us for any purpose. Furthermore, because we only own a 50% equity interest in Insight Midwest, the Insight Midwest partnership agreement provides that Insight Midwest may not pay dividends or make other distributions to us without the consent of our partner, Comcast Cable. As a result, even if the creditors of Insight Midwest and its subsidiaries were to permit distributions to us, Comcast Cable could prohibit any such distribution.

          As a result, we cannot assure you that we will be able to access the cash flow of Insight Midwest and its subsidiaries to make payments on our 12 ¼% senior discount notes. If we are unable to refinance the indebtedness of Insight Midwest and its subsidiaries on terms that provide Insight Midwest with a greater ability to provide us with funds prior to August 15, 2006, we may not be able to make payments required under the 12 ¼% senior discount notes.

          Furthermore, borrowings under the Midwest Holdings credit facility are secured and a portion of such facility will mature prior to our and Insight Midwest’s outstanding notes.  Accordingly, we may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

     The Midwest Holdings credit facility requires us to comply with various financial and operating restrictions which could limit our ability to compete as well as our ability to expand.

          The Midwest Holdings credit facility contains covenants that restrict Midwest Holdings’ subsidiaries ability to:

• distribute funds or pay dividends to Insight Midwest;

• incur additional indebtedness or issue additional equity;

• repurchase or redeem equity interests and indebtedness;

• pledge or sell assets or merge with another entity;

• create liens; and

• make certain capital expenditures, investments or acquisitions.

53

          Such restrictions could limit our ability to compete as well as our ability to expand. The ability of Midwest Holdings’ subsidiaries to comply with these provisions may be affected by events beyond our control. If they were to breach any of these covenants, they would be in default under the credit facility and they would be prohibited from making distributions to Insight Midwest.

     We have a history of net losses, and may not be profitable in the future.

          We have a history of net losses and expect to incur additional net losses in the future. We incurred a net loss before accruals of preferred interests of $43.0 million for the year ended December 31, 2000, $74.8 million for the year ended December 31, 2001 and $48.0 million for the year ended December 31, 2002.

          We have and will continue to have a substantial amount of interest expense in respect of debt incurred and depreciation and amortization expenses relating to acquisitions of cable systems as well as expansion and upgrade programs. Such expenses have contributed to the net losses we experienced. We expect that we will continue to incur such non-operating expenses at increased levels as a result of our recent acquisitions and our network upgrade program, which expenses will result in continued net losses.

     We have a limited history of operating our current cable television systems and these systems may not generate sales at or exceeding historical levels.

           We are still in the process of integrating the Illinois systems we acquired in January 2001. The historical financial information of our systems may not fully indicate our future operating results. This makes it difficult for you to completely evaluate our performance.

     We could face considerable business and financial risk in implementing our acquisition strategy.

          As part of our strategy of pursuing value-enhancing transactions, we intend to seek to swap or acquire systems that strategically fit our clustering and operating strategy.  Although we regularly engage in discussions with respect to possible acquisitions and joint ventures, we do not currently have any understandings, commitments or agreements relating to any acquisitions. Future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and an increase in amortization expenses related to goodwill and other intangible assets, which could have a material adverse effect upon our business, financial condition and results of operations.

          Risks we could face with respect to acquisitions include:

• difficulties in the integration of the operations, technologies, products and personnel of the acquired company;

• risks of entering markets in which we have no or limited prior experience;

• diversion of management’s attention away from other business concerns; and

• expenses of any undisclosed or potential legal liabilities of the acquired company.

          The risks associated with acquisitions could have a material adverse effect upon our business, financial condition and results of operations. We cannot assure that we will be successful in consummating future acquisitions on favorable terms or at all.

54

     Our programming costs are substantial and they may increase, which could result in a decrease in profitability if we are unable to pass that increase on to our customers.

          In recent years the cable industry has experienced a rapid escalation in the cost of programming, and sports programming in particular.  For 1998 through 2002, programming costs increased significantly.  Our cable programming services are dependent upon our ability to procure programming that is attractive to our customers at reasonable rates.  Programming costs may continue to escalate and we may not be able to pass programming cost increases on to our customers. Our financial condition and results of operations could be negatively affected by further increases in programming costs. Programming has been and is expected to continue to be our largest single expense item and accounted for approximately 44% of the total programming and other operating costs and selling, general and administrative expenses for our systems for the year ended December 31, 2002.

     We are uncertain whether the recent acquisition by Comcast of AT&T’s broadband business will have an adverse effect on our future financial and operating results, and whether it will affect our telephone services contract or programming costs.

          Until recently, Insight Midwest was owned 50% by us, as general partner, and 50% by an indirect subsidiary of AT&T Broadband, as limited partner. AT&T Broadband was a fully integrated business unit of AT&T Corp.  As a result of Comcast’s acquisition of AT&T Broadband on November 18, 2002, a new senior management team comprised principally of individuals that prior to the transaction operated the Comcast cable properties will exercise significant control over decisions relating to Insight Midwest’s limited partner. Insight Midwest’s partnership agreement prohibits it from taking certain actions without the approval of the limited partner. Accordingly, Insight Midwest will be dependent upon the discretion of its limited partner’s new management in obtaining approval for certain significant transactions.

          Our long-term agreements with Comcast Cable to facilitate the delivery of local telephone services uses Comcast Cable’s switching and transport facilities and our network infrastructure, on which Comcast Cable leases capacity for a fee. Comcast Cable is the regulated telephone carrier for the provision of the telephone services. We are unable to predict whether the new management for Comcast Cable will affect our contractual relationship for the provision of telephone services. Furthermore, there can be no assurance how Comcast Cable will continue to carry out its obligations under our telephone agreements, whether with respect to existing or future deployments.

          All of our existing deployments of telephone services are marketed under the AT&T Digital Phone brand.  We are uncertain whether Comcast has made any arrangements with AT&T for the continued licensing to us of the AT&T Digital Phone brand, as required by the terms of the agreements. It has been the belief of our management that our telephone services would be able to achieve higher penetration levels by marketing the service under the AT&T brand and leveraging AT&T’s telephone expertise with our local presence and customer relationships. We are unable to predict whether the inability to market telephone services using the AT&T brand would have an adverse effect on the future results of our telephone operations.

          We have relied in the past on our contractual arrangements with AT&T Broadband’s programming supplier, Satellite Services, Inc., for the purchase of certain programming services for our systems at what we believe are attractive rates. As a result of Comcast’s acquisition of AT&T Broadband, Comcast and AT&T Broadband in many cases have long-term agreements, in some cases with the same counter parties, for the same services and products, such as programming. In the cases where there are separate agreements with the same counterparties, Comcast is presently evaluating whether such

55

agreements apply only to the operations to which they have historically applied or whether instead one of the two contracts will apply to the operations of both companies and the other contract will be terminated. We are unable to determine whether such matters will have an adverse effect on our programming costs.

     The competition we face from other cable networks and alternative service providers may cause us to lose market share.

          The impact from competition, particularly from direct broadcast satellite television systems and companies that overbuild in our market areas, has resulted in a decrease in customer growth rates as well as a loss of subscribers. The industry growth rate for basic customers for the years ended December 2002 and 2001 was .7% and 1% respectively, while satellite penetration as of December 2002 averaged 15.8% nationwide, slightly down from 16.5% in December 2001. This in turn has negatively impacted our financial performance. Increased competition may continue to impact our financial performance. Many of our potential competitors have substantially greater resources than we do, and we cannot predict the market share our competitors will eventually achieve, nor can we predict their ability to develop products which will compete with our planned new and enhanced products and services such as high-speed data access, video-on-demand and telephone services.

          Direct broadcast satellite service consists of television programming transmitted via high-powered satellites to individual homes, each served by a small satellite dish. Legislation permitting direct broadcast satellite operators to transmit local broadcast signals was enacted on November 29, 1999. This eliminates a significant competitive advantage that cable system operators have had over direct broadcast satellite operators. Direct broadcast satellite operators have begun delivering local broadcast signals in the largest markets and there are plans to expand such carriage to many more markets over the next year.

          Since our cable systems are operated under non-exclusive franchises, competing operators of cable systems and other potential competitors, such as municipalities and municipal utility providers, may be granted franchises to build cable systems in markets where we hold franchises. Competition in geographic areas where a secondary franchise is obtained and a cable network is constructed is called “overbuilding.” As of December 31, 2002, approximately 8.7% of the homes passed by our cable systems were overbuilt. Also as of December 31, 2002, an affiliate of Southern Indiana Gas and Electric Co. has overbuilt our Evansville, Indiana system and passes approximately 82,300 homes also passed by us. In addition, Knology, Inc. has obtained a franchise to provide cable television service in the City of Louisville, Kentucky, where we operate a system, although they have not constructed a cable system.  In addition, as of December 31, 2002, WideOpenWest had overbuilt our Columbus, Ohio system and passed approximately 129,100 homes also passed by us. In our Illinois system, the city of Springfield is considering a municipal overbuild. We cannot predict what effect competition from these or future competitors will have on our business and operations.

     We will face competition from providers of alternatives to our Internet and telephone services.

          Several telephone companies are introducing digital subscriber line technology (also known as DSL), which allows Internet access over traditional phone lines at data transmission speeds greater than those available by a standard telephone modem. Although these transmission speeds are not as great as the transmission speeds of a cable modem, we believe that the transmission speeds of digital subscriber line technology are sufficiently high that such technology will compete with cable modem technology. We cannot predict the impact DSL technology will have on our Internet access services or on our operations.

          As we expand our offerings to include telephone services, the telephone services we deliver will be subject to competition from existing providers, including both local exchange telephone companies

56

and long-distance carriers. We cannot predict the extent to which the presence of these competitors will influence customer penetration in our telephone service areas.

          We expect that the most significant competitors for our Internet access and telephone service offerings will be the existing local exchange telephone companies as well as resellers using the local exchange telephone companies’ communications networks.  These competitors are currently the predominant providers of Internet and telephone services in our markets.

     We may be required to provide access to our networks to other Internet service providers, which could significantly increase our competition and adversely affect our ability to provide new products and services.

          The U.S. Congress and the Federal Communications Commission have been asked to require cable operators to provide access over their cable systems to other Internet service providers. If we are required to provide open access, it could prohibit us from entering into or limit our existing agreements with Internet service providers, adversely impact our anticipated revenues from high-speed Internet access services and complicate marketing and technical issues associated with the introduction of these services. To date, the U.S. Congress and the Federal Communications Commission have declined to impose these requirements although the FCC has recently issued a notice of proposed rulemaking on this matter. This same open access issue is also being considered by some local franchising authorities and several courts. Franchise renewals and transfers could become more difficult depending upon the outcome of this issue.

     Our business has been and continues to be subject to extensive governmental legislation and regulation, and changes in this legislation and regulation could increase our costs of compliance and reduce the profitability of our business.

          The cable television industry is subject to extensive legislation and regulation at the federal and local levels, and, in some instances, at the state level, and many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Operating in a regulated industry increases the cost of doing business generally. We may also become subject to additional regulatory burdens and related increased costs. As we continue to introduce additional communications services, we may be required to obtain federal, state and local licenses or other authorizations to offer such services. We may not be able to obtain such licenses or authorizations in a timely manner, or at all, or conditions could be imposed upon such licenses and authorizations that may not be favorable to us.

     Members of management, as major stockholders, possess unequal voting rights resulting in the ability to control all major corporate decisions, and other stockholders may be unable to influence these corporate decisions.

          We have two classes of common stock -- Class A which carries one vote per share and Class B which carries ten votes per share. Our directors, executive officers, members of management and family members own all of the outstanding Class B common stock. As a result of their stock ownership, such holders of Class B common stock will have the power to elect all of our directors and control stockholder decisions on other matters such as amendments to our certificate of incorporation and bylaws, and mergers or other fundamental corporate transactions. The interests of our controlling stockholders, including our management, may conflict with the interests of the other holders of Class A common stock.

          The disproportionate voting rights of the Class A common stock relative to the Class B common stock may make us a less attractive target for a takeover than we otherwise might be or render more difficult or discourage a merger proposal or a tender offer.

57

Item 7A.  Quantitative and Qualitative Disclosure About Market Risk

          Our revolving credit and term loan agreements bear interest at floating rates.  Accordingly, we are exposed to potential losses related to changes in interest rates.  We do not enter into derivatives or other financial instruments for trading or speculative purposes.  In order to manage our exposure to interest rate risk, we enter into derivative financial instruments, typically interest rate swaps and collars.  The counter-parties to our swap and collar agreements are major financial institutions.  As of December 31, 2002, $285.0 million of our interest rate swap and collar agreements expire in varying amounts through July 2003 and $150.0 million expire in August 2004.

          The fair market value and carrying value of our 9¾% senior notes, 10½% senior notes and 12¼ senior discount notes was $1.1 billion as of December 31, 2002.  Additionally, the fair market value of our credit facility borrowings approximate their carrying values as the credit facility borrowings bear interest at floating rates of interest.  As of December 31, 2002, the estimated fair value (cost if terminated) of our interest rate swap and collar agreements was approximately $(17.8) million, which represents the amount required to enter into offsetting contracts with similar remaining maturities based on quoted market prices and is reflected in our financial statements as other non-current liabilities.  Changes in the fair value of derivative financial instruments are either recognized in income or in stockholders’ equity as a component of other comprehensive loss depending on whether the derivative financial instruments qualify for hedge accounting.

          As of December 31, 2002, we had entered into interest rate swaps that approximated $485.0 million, or 33.2%, of our borrowings under all of our credit facilities.  A hypothetical 100 basis point increase in interest rates along the entire interest rate yield curve would increase our annual interest expense by approximately $9.8 million.

Item 8.  Financial Statements and Supplementary Data

          Reference is made to our consolidated financial statements beginning on page F-1 of this report.

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

          None.

58

PART III

Item 10.  Directors and Executive Officers of the Registrant

          Information called for by Item 10 is set forth under the heading “Executive Officers of the Registrant” in Part I hereof and in “Election of Directors” in our proxy statement relating to the 2003 Annual Meeting of Stockholders, which is incorporated herein by this reference.

Item 11.  Executive Compensation

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

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

          Information called for by Item 12 is set forth under the heading “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans” in the proxy statement, which is incorporated herein by this reference.

Item 13.  Certain Relationships and Related Transactions

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

Item 14.  Controls and Procedures

          Within the 90 days prior to the date of this report, under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.   Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings.  There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

59

PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

               (a)   Financial Statements:

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

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Auditors	F-1
Insight Communications Company, Inc. Consolidated Balance Sheets as of December 31, 2002 and 2001	F-2
Insight Communications Company, Inc. Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000	F-3
Insight Communications Company, Inc. Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2002, 2001 and 2000	F-4
Insight Communications Company, Inc. Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000	F-5
Insight Communications Company, Inc. Notes to Consolidated Financial Statements	F-6

               (b)  Reports on Form 8-K:

          We filed the following reports on Form 8-K during the fourth quarter of the year ended December 31, 2002:

1.	On December 10, 2002 relating to forward-looking statements with respect to 2003.
2.	On December 13, 2002 relating to the announcement of a debt offering by Insight Midwest, L.P. and Insight Capital, Inc., as presented in press releases of December 11, 2002 and December 13, 2002.

60

          (c)   Exhibits:

Exhibit Number	Exhibit Description
2.1	Purchase and Option Agreement, dated as of August 8, 2000, among Coaxial Communications of Central Ohio, Inc., Insight Communications of Central Ohio, LLC, Insight Holdings of Ohio, LLC, Insight Communications Company, L.P., Insight Communications Company, Inc., Coaxial LLC, Coaxial DJM LLC, Coaxial DSM LLC, Barry Silverstein, Dennis J. McGillicuddy, and D. Stevens McVoy (1)
2.2	Asset Contribution Agreement, dated August 15, 2000, by and among, Command Cable of Eastern Illinois Limited Partnership, MediaOne of Illinois, Inc., Northwest Illinois TV Cable Company, S/D Cable Partners, Ltd., TCI American Cable Holdings, L.P., TCI of Bloomington/Normal, Inc., TCI Cablevision of Texas, Inc., UACC Midwest, Inc., United Cable Television of Illinois Valley, Inc., United Cable Television of Southern Illinois, Inc., TCI of Indiana Holdings, LLC, Insight Communications Company, L.P. and Insight Midwest, L.P. (“Asset Contribution Agreement”) (2)
2.3	Amendment to the Asset Contribution Agreement, dated January 5, 2001 (3)
2.4	Asset Exchange Agreement, dated August 15, 2000, by and between MediaOne of Illinois, Inc. and Insight Communications Company, L.P. (“Asset Exchange Agreement”) (2)
2.5	Amendment to the Asset Exchange Agreement, dated January 5, 2001 (3)
2.6	Asset Purchase and Sale Agreement, dated August 15, 2000, by and between TCI of Illinois, Inc., TCI of Racine, Inc., UACC Midwest, Inc. and Insight Communications Company, L.P. (“Asset Purchase and Sale Agreement”) (2)
2.7	Amendment to the Asset Purchase and Sale Agreement, dated January 5, 2001 (3)
3.1	Restated Certificate of Incorporation of Registrant (4)
3.2	By-laws of Registrant (4)
10.1	1999 Equity Incentive Plan of Registrant (amends and restates 1999 Stock Option Plan)
10.2	Credit Agreement, dated as of January 5, 2001, among Insight Midwest Holdings, LLC, several banks and financial institutions or entities, and The Bank of New York, as administrative agent (“Credit Agreement”) (3)
10.2A	Amendment No. 1 to Credit Agreement
10.2B	Amendment No. 2 to Credit Agreement (5)
10.3	Second Amended and Restated Operating Agreement of Insight Communications Midwest, LLC, dated as of January 5, 2001(6)
10.4	Amended and Restated Management Agreement by and between Insight Communications of Indiana, LLC (now known as Insight Communications Midwest, LLC) and Insight Communications Company, L.P., dated as of October 1, 1999 (7)
10.5	First Amendment to Amended and Restated Management Agreement dated as of January 5, 2001, by and between Insight Communications Midwest, LLC and Insight Communications Company, L.P.(6)
10.6	Amended and Restated Limited Partnership Agreement of Insight Kentucky Partners II, L.P., dated as of October 1, 1999(6)
10.7	First Amendment to Amended and Restated Limited Partnership Agreement of Insight Kentucky Partners II, L.P., dated as of January 5, 2001(6)
10.8	Management Agreement by and between Insight Kentucky Partners II, L.P. and Insight Communications Company, L.P., dated as of October 1, 1999 (7)
10.9	Amended and Restated Operating Agreement of Insight Ohio, dated as of August 8, 2000 (1)
10.10	Amended and Restated Limited Partnership Agreement of Insight Midwest, L.P., dated January 5, 2001 (3)

61

10.10A	First Amendment to Amended and Restated Limited Partnership Agreement of Insight Midwest, L.P., dated September 30, 2002 (8)
10.11	Indenture relating to 9 ¾% senior notes of Insight Midwest, L.P. and Insight Capital, Inc., dated as of October 1, 1999 (9)
10.12	Indenture relating to 10½ senior notes of Insight Midwest, L.P. and Insight Capital, Inc., dated as of November 6, 2000(6)
10.13	Indenture relating to 10% senior notes of Coaxial Communications of Central Ohio, Inc. and Phoenix Associates, dated as of August 21, 1998 (10)
10.14	Indenture relating to 12 7/8% senior discount notes of Coaxial LLC and Coaxial Financing Corp., dated as of August 21, 1998 (11)
10.15	Indenture relating to 12.25% senior discount notes of Registrant, dated as of February 6, 2001(6)
10.16	Revolving Credit Agreement dated as of October 7, 1998 among Insight Communications of Central Ohio, LLC, several banks and financial institutions or entities, and Canadian Imperial Bank of Commerce, as administrative agent  (“Insight Ohio Credit Agreement”) (11)
10.16A	First Amendment to Insight Ohio Credit Agreement, dated as of June 30, 2000 (12)
10.16B	Second Amendment to Insight Ohio Credit Agreement, dated as of June 30, 2000 (12)
10.16C	Third Amendment to Insight Ohio Credit Agreement, dated as of March 4, 2002 (12)
10.17	Security holders Agreement by and among Registrant, Vestar Capital Partners III, L.P., Sandler Capital Partners IV, L.P., Sandler Capital Partners IV FTE, L.P., Sidney R. Knafel, Michael S. Willner, Kim D. Kelly and Senior Management Securityholders, dated as of May 11, 1999, with Side Letter Agreement by and among Insight Communications Company, L.P., Vestar Capital Partners III, L.P., Sidney R. Knafel, Michael S. Willner, Kim D. Kelly, Sandler Capital Partners IV, L.P. and Sandler Capital Partners IV FTE, L.P., dated May 11, 1999 (the “Letter Agreement”) (4)
10.18	Amendment, dated July 16, 1999 to the Letter Agreement (4)
10.19	Cable Facilities Lease Agreement, dated July 17, 2000, among AT&T Broadband, LLC, Registrant and certain of Registrant’s affiliates (portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment) (1)
10.20	Amended and Restated Consulting Agreement, dated as of March 17, 2000, by and between InterMedia Partners Southeast and Insight Communications Company, L.P.(7)
10.21	Asset Exchange Agreement, dated September 30, 2002, between InterMedia Partners Southeast and Insight Communications Midwest, LLC (8)
10.22	Form of Amended and Restated Non-Recourse Secured Promissory Note, dated December 23, 2002
10.23	Agreement, dated as of December 23, 2002, by and between Kim D. Kelly, Registrant and certain stockholders
21.1	Subsidiaries of the Registrant (13)
23.1	Consent of Ernst & Young LLP

(1)	Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000 and incorporated herein by reference.
(2)	Filed as an exhibit to Registrant’s Current Report on Form 8-K, dated August 15, 2000, and incorporated herein by reference.
(3)	Filed as an exhibit to Registrant’s Current Report on Form 8-K, dated January 5, 2001, and incorporated herein by reference.

62

(4)	Filed as an exhibit to Registrant’s Registration Statement on Form S-1 (Registration Statement No. 333-78293) and incorporated herein by reference.
(5)	Filed as an exhibit to Registrant’s Quarterly Report on form 10-Q for the quarterly period ended June 30, 2002 and incorporated herein by reference.
(6)	Filed as an Exhibit to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference.
(7)	Filed as an exhibit to the Registration Statement on Form S-4 of Insight Midwest, L.P. and Insight Capital, Inc. (Registration No. 333- 33540) and incorporated herein by reference.
(8)	Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2002 and incorporated herein by reference.
(9)	Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference.
(10)	Filed as an exhibit to the Registration Statement on Form S-4 of Coaxial Communications of Central Ohio, Inc., Phoenix Associates and Insight Communications of Central Ohio, LLC (Registration No. 333- 63677) and incorporated herein by reference.
(11)	Filed as an exhibit to the Registration Statement on Form S-4 of Coaxial LLC, Coaxial Financing Corp., and Insight Communications of Central Ohio, LLC (Registration No. 333- 64449) and incorporated herein by reference.
(12)	Filed as an exhibit to Insight Ohio’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002 and incorporated herein by reference.
(13)	Filed as an exhibit to Registrant’s Annual Report on Form 10–K for the year ended December 31, 2001 and incorporated herein by reference.

63

Report of Independent Auditors

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

We have audited the accompanying consolidated balance sheets of Insight Communications Company, Inc. (the “Company”) as of December 31, 2002 and 2001, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2002.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2002 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 2, the Company changed its method of accounting for Goodwill and Other Intangible Assets effective January 1, 2002.

/s/ ERNST & YOUNG LLP

New York, New York
February 25, 2003

F-1

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

		December 31, 2002			December 31, 2001
Assets
Cash and cash equivalents		$	74,850		$	198,548
Investments			3,666			18,080
Trade accounts receivable, net of allowance for doubtful accounts of $1,296 and $2,818 as of December 31, 2002 and 2001			25,725			22,918
Launch funds receivable			5,197			12,980
Prepaid expenses and other assets			16,177			18,363
	Total current assets		125,615			270,889
Fixed assets, net			1,220,251			1,151,709
Goodwill			72,965			72,675
Franchise costs			2,331,282			2,324,263
Deferred financing costs, net of accumulated amortization of $9,030 and $5,259 as of December 31, 2002 and 2001			33,298			32,294
Other non-current assets			5,651			15,562
	Total assets	$	3,789,062		$	3,867,392
Liabilities and stockholders’ equity
Accounts payable		$	47,220		$	67,095
Accrued expenses and other liabilities			23,035			23,793
Accrued property taxes			14,428			11,030
Accrued programming costs			34,922			24,287
Deferred revenue			4,132			8,673
Interest payable			24,685			21,940
Debt – current portion			5,000			—
Preferred interest distribution payable			5,250			5,250
	Total current liabilities		158,672			162,068
Deferred revenue			6,533			12,262
Debt			2,576,004			2,542,476
Other non-current liabilities			53,085			62,964
Minority interest			224,803			255,879
Preferred interests			191,820			185,713
Stockholders’ equity:
Preferred stock; $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding as of December 31, 2002 and 2001			—			—
Common stock; $.01 par value:
	Class A - 300,000,000 shares authorized; 50,704,390 and 50,266,162 shares issued and outstanding as of December 31, 2002 and 2001		507			502
	Class B - 100,000,000 shares authorized; 9,354,468 and 9,977,537 shares issued and outstanding as of December 31, 2002 and 2001		93			100
Additional paid-in-capital			829,873			851,936
Accumulated deficit			(237,956	)		(189,964	)
Deferred stock compensation			(5,882	)		—
Accumulated other comprehensive loss			(8,490	)		(16,544	)
	Total stockholders’ equity		578,145			646,030
	Total liabilities and stockholders’ equity	$	3,789,062		$	3,867,392

See accompanying notes

F-2

INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

		Year Ended December 31,
		2002			2001			2000
Revenue		$	807,882		$	728,338		$	489,146
Operating costs and expenses:
	Programming and other operating costs		274,753			258,934			170,071
	Selling, general and administrative		173,505			153,003			104,974
	Non-recurring high-speed data charges		4,116			3,785			—
	Depreciation and amortization		216,506			383,449			236,242
Total operating costs and expenses			668,880			799,171			511,287
Operating income (loss)			139,002			(70,833	)		(22,141	)
Other income (expense):
	Gain (loss) on cable systems exchange		—			34,178			(956	)
	Interest expense		(204,730	)		(213,045	)		(115,524	)
	Interest income		2,126			7,315			5,771
	Other		(502	)		(2,320	)		(294	)
Total other expense, net			(203,106	)		(173,872	)		(111,003	)
Loss before minority interest, investment activity and income taxes			(64,104	)		(244,705	)		(133,144	)
Minority interest			31,076			141,314			67,773
Equity in losses of investees			—			(2,031	)		(3,830	)
Impairment write-down of investments			(18,023	)		(9,899	)		(88,554	)
Gain (loss) from early extinguishment of debt			3,560			(10,315	)		—
Gain on sale of equity investment			—			—			80,943
Loss before income taxes			(47,491	)		(125,636	)		(76,812	)
Benefit (provision) for income taxes			(501	)		50,847			33,825
Net loss			(47,992	)		(74,789	)		(42,987	)
Accrual of preferred interests			(20,107	)		(19,432	)		(18,725	)
Net loss attributable to common stockholders		$	(68,099	)	$	(94,221	)	$	(61,712	)
Basic and diluted loss per share attributable to common stockholders		$	(1.13	)	$	(1.57	)	$	(1.03	)
Basic and diluted weighted average shares outstanding			60,284			60,202			59,703

See accompanying notes

F-3

INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)

			Common Stock			Additional Paid-in Capital			Accumulated Deficit			Deferred Stock Compensation			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 1999				594			656,486			(72,188	)		—			3,168			588,060
	Net loss									(42,987	)								(42,987	)
	Realization of impairment of investments															(3,168	)		(3,168	)
	Total comprehensive loss																		(46,155	)
	Issuance of common stock in acquisition of equity interest			8			17,492												17,500
	Accrual of preferred interests						(18,725	)											(18,725	)
Balance at December 31, 2000				602			655,253			(115,175	)		—			—			540,680
		Net loss								(74,789	)								(74,789	)
		Unrealized loss on investments														(3,118	)		(3,118	)
		Transition adjustment loss on adoption of SFAS No. 133, net of tax														(1,108	)		(1,108	)
		Unrealized loss on interest rate swaps, net of tax														(12,318	)		(12,318	)
		Total comprehensive loss																	(91,333	)
		Issuance of common stock to 401(k) plan					768												768
		Issuance of common stock through exercise of stock options and as stock compensation					399												399
		Contribution of capital associated with AT&T transactions (Note 3)					214,948												214,948
		Accrual of preferred interests					(19,432	)											(19,432	)
Balance at December 31, 2001				602			851,936			(189,964	)		—			(16,544	)		646,030
		Net loss								(47,992	)								(47,992	)
		Unrealized loss on investments														(8,904	)		(8,904	)
		Realization of impairment of investments														12,023			12,023
		Unrealized gain on interest rate swaps														4,935			4,935
		Total comprehensive loss																	(39,938	)
		Acquisition of common stock in satisfaction of employee loan		(7	)		(9,576	)											(9,583	)
		Issuance of common stock to employees		4			5,769						(5,882	)					(109	)
		Issuance of common stock to 401(k) plan		1			1,851												1,852
		Accrual of preferred interests					(20,107	)											(20,107	)
Balance at December 31, 2002			$	600		$	829,873		$	(237,956	)	$	(5,882	)	$	(8,490	)	$	578,145

See accompanying notes

F-4

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

				Year Ended December 31,
				2002			2001			2000
Operating activities:
	Net loss			$	(47,992	)	$	(74,789	)	$	(42,987	)
	Adjustments to reconcile net loss to net cash
	Provided by operating activities:
		Depreciation and amortization			216,506			383,449			236,242
		Equity in losses of investees			—			2,031			3,830
		Impairment of investments			18,023			9,899			88,554
		Loss (gain) on cable systems exchange			—			(34,178	)		956
		Loss (gain) from early extinguishment of debt			(3,560	)		10,315			—
		Gain on sale of equity investment			—			—			(80,943	)
		Minority interest			(31,076	)		(141,314	)		(67,774	)
		Provision for losses on trade accounts receivable			13,386			12,093			8,655
		Non-cash compensation			124			—			—
		Contribution of common stock to 401(k) plan			1,852			768			—
		Amortization of note discount			31,736			24,770			(722	)
		Deferred income taxes			—			(51,495	)		(33,825	)
		Changes in operating assets and liabilities, net of the effect of acquisitions:
			Trade accounts receivable		(15,871	)		(13,375	)		(14,012	)
			Launch fund receivable		7,783			3,111			(9,052	)
			Prepaid expenses and other assets		2,713			(5,631	)		2,111
			Accounts payable		(20,003	)		20,937			(7,409	)
			Accrued expenses and other liabilities		1,675			14,734			8,008
	Net cash provided by operating activities				175,296			161,325			91,632
Investing activities:
	Purchase of fixed assets				(283,004	)		(325,581	)		(262,241	)
	Purchase of intangible assets				(1,588	)		(3,069	)		(3,978	)
	Investment in equity securities				—			(10,725	)		(11,873	)
	Purchase of cable television systems, net of cash acquired				(8,798	)		(463,500	)		(1,718	)
	Net cash used in investing activities				(293,390	)		(802,875	)		(279,810	)
Financing activities:
	Distributions of preferred interests				(14,000	)		(14,000	)		(14,000	)
	Proceeds from borrowings under credit facilities				131,000			1,580,000			124,400
	Repayment of credit facilities				(273,000	)		(654,900	)		(488,500	)
	Proceeds from issuance of notes				179,995			220,084			492,500
	Repayment of debt associated with cable system transactions				—			(306,158	)		—
	Purchase of senior discount notes				(23,220	)		—			—
	Debt issuance costs				(5,535	)		(18,310	)		(6,000	)
	Principal payments on capital leases and other non-current liabilities				(844	)		(574	)		—
	Exercise of stock options				—			223			—
	Net cash provided by (used in) financing activities				(5,604	)		806,365			108,400
Net change in cash and cash equivalents					(123,698	)		164,815			(79,778	)
Cash and cash equivalents, beginning of year					198,548			33,733			113,511
Cash and cash equivalents, end of year				$	74,850		$	198,548		$	33,733

See accompanying notes

F-5

INSIGHT COMMUNICATIONS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Organization and Basis of Presentation

Through our wholly owned subsidiary, Insight Communications Company, L.P. (“Insight LP”), we own a 50% interest in Insight Midwest, L.P. (“Insight Midwest”), which through its subsidiaries, Insight Communications Midwest, LLC (“Insight Communications Midwest”), Insight Communications of Kentucky, L.P. (“Insight Kentucky”) and Insight Communications of Central Ohio, LLC (“Insight Ohio”), owns and operates cable television systems in Indiana, Kentucky, Ohio, Illinois and Georgia which passed approximately 2.3 million homes and served approximately 1.3 million customers as of December 31, 2002. 

Insight LP is the general partner of Insight Midwest.  Through Insight LP, we manage all of Insight Midwest’s systems and also manage certain systems owned by an affiliate of AT&T Broadband, LLC (now known as Comcast Cable Holdings, LLC, “Comcast Cable”), the owner of the remaining 50% interest in Insight Midwest. 

In November 2002, AT&T Broadband and Comcast Corporation merged their respective cable systems and certain other assets. The transaction did not result in any direct change in Insight Midwest’s ownership structure and we continue to serve as the general partner of Insight Midwest and as the manager of all of Insight Midwest’s systems. 

Our other wholly owned subsidiary, Insight Interactive LLC, owns a 100% equity interest in SourceSuite LLC the results of which have been consolidated as of January 1, 2002 as a result of Insight Interactive’s acquisition of the remaining 50% equity interest from Source Media, Inc. in March 2002. 

2.  Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include our accounts and those of our wholly owned subsidiaries.   Although Insight Midwest is equally owned by Insight LP and an indirect subsidiary of Comcast Cable, Insight LP, as the general partner of Insight Midwest, effectively controls all its operating and financial decisions.  Accordingly, the results of Insight Midwest are included in our consolidated financial statements.  The minority interest represents Comcast’s 50% ownership interest in Insight Midwest.  Intercompany balances and transactions have been eliminated in consolidation.

Revenue Recognition

Revenue is earned from customer fees for cable television programming services including premium, digital and pay-per-view services and ancillary services, such as rental of converters and remote control devices, installations and from selling advertising.  In addition, we earn revenues from providing high-speed data services and from facilitating the delivery of telephone services as well as from commissions for products sold through home shopping networks and management fees.  Revenue is recorded in the month the related services are rendered.

F-6

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

2.  Significant Accounting Policies (continued)

Use of Estimates

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.  Actual results could differ from those estimates.

Cash Equivalents

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents.

Investments

All marketable equity investments are classified as available-for-sale under Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities”.  In accordance with SFAS No. 115, available-for-sale securities are carried at fair value, with unrealized gains and losses, net of income taxes, reported as a separate component of stockholders’ equity.  Fair value is based on quoted market prices.  All other equity investments for which a quoted market price is unavailable are carried at cost and periodically reviewed for impairment.

Fixed Assets

Fixed assets are stated at cost and include costs capitalized for labor and overhead incurred in connection with the installation of cable system infrastructures, including those providing high-speed data and telephone services.  In addition, we capitalize labor and material costs associated with installations related to new services on customer premises.  Depreciation for buildings, cable system equipment, furniture, fixtures and office equipment is calculated using the straight-line method over estimated useful lives ranging from 2 to 30 years.  Building improvements are amortized using the straight-line method over the shorter of the remaining terms of the leases or the estimated lives of the improvements. 

The carrying value of fixed assets is reviewed if facts and circumstances suggest that they may be impaired.  If this review indicates that the carrying value of the fixed assets will not be recovered from undiscounted future cash flows generated from such assets, an impairment loss would be recognized for the amount that the asset’s carrying value exceeds its fair value.  We believe that no impairment of fixed assets existed as of December 31, 2002 or 2001.

F-7

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

2.  Significant Accounting Policies (continued)

Franchise Costs and Goodwill

Costs incurred in negotiating and renewing franchise agreements are capitalized and were amortized over the life of the franchise agreements through December 31, 2001.  Franchise costs and goodwill acquired through the purchase of cable television systems were amortized using the straight-line method over a period of up to 15 years.  As of January 1, 2002, in connection with our adoption of SFAS No. 142, we no longer amortize franchise costs or goodwill. We recorded amortization expense of $4.7 million, $200.9 million and $100.3 million for the years ended December 31, 2002, 2001 and 2000.  We estimate aggregate amortization expense to be approximately $5.5 million for each of the five succeeding fiscal years, primarily relating to deferred financing costs.

SFAS No. 142 requires that goodwill and indefinite-lived intangible assets be tested annually for impairment using a two-step process.  The first step is to identify a potential impairment and the second step measures the amount of the impairment loss, if any.  Based on our analysis, there was no impairment of goodwill or franchise costs upon the adoption of SFAS No. 142 on January 1, 2002 or on October 1, 2002, the date on which we performed our first annual impairment test.

Applying the effects of the adoption of SFAS No. 142 to the years ended December 31, 2001 and 2000, would have resulted in net loss of $(25.2) million and $(15.1) million and basic and diluted loss per share attributable to common stockholders of $(.42) and $(.25).  The reconciliation of reported net loss to pro forma net loss as adjusted for the effects of SFAS No. 142 for the years ended December 31, 2001 and 2000 is as follows (in thousands):

		Year Ended December 31, 2001			Year Ended December 31, 2000
Net loss as reported		$	(74,789	)	$	(42,987	)
Exclude amortization, net of minority interest and taxes for:
	Franchise costs		42,373			23,827
	Goodwill		7,206			4,052
Pro forma net loss		$	(25,210	)	$	(15,108	)

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which became effective for us beginning January 1, 2002.  SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions relating to the disposal of a segment of a business of Accounting Principles Board Opinion No. 30.  The adoption of SFAS No. 144 had no impact on our consolidated financial position or results of operations.

F-8

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

2.  Significant Accounting Policies (continued)

Deferred Financing Costs

Deferred financing costs relate to costs, primarily legal and bank facility fees, incurred in securing bank loans and other sources of financing.  These costs are amortized over the life of the applicable debt.  We recorded amortization expense of $4.7 million, $200.9 million and $100.3 million for the years ended December 31, 2002, 2001 and 2000.  We estimate aggregate amortization expense to be approximately $5.5 million for each of the five succeeding fiscal years, primarily relating to deferred financing costs.

Stock-Based Compensation

We have elected to use the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”), to account for stock-based compensation. Under APB No. 25, compensation expense is recognized only when the exercise price of options is below the market price of the underlying stock on the date of grant.  Such costs are deferred and recognized ratably as compensation expense over the vesting period.  The following table summarizes relevant information as to reported results under our intrinsic value method of accounting for stock awards, with supplemental information, as if the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” had been applied for each of the three years ended December 31, 2002.  The following assumptions were used in determining the fair values: weighted average risk-free interest rate – 4.00% (2002), 4.50% (2001) and 6.25% (2000); stock price volatility of 50% in all years; dividend yield of 0% in all years; and expected option life of seven years in all years:

	2002			2001			2000
		(in thousands, except share data)
Net loss attributable to common stockholders	$	(68,099	)	$	(94,221	)	$	(61,712	)
Stock-based compensation as reported, net of tax		124			56			—
Stock-based compensation determined under fair value based method for all awards, net of tax		(4,175	)		(748	)		(400	)
Adjusted net loss attributable to common stockholders	$	(72,150	)	$	(94,913	)	$	(62,112	)
Basic and diluted net loss per share, as reported	$	(1.13	)	$	(1.57	)	$	(1.03	)
Basic and diluted net loss per share, SFAS 123 adjusted	$	(1.20	)	$	(1.58	)	$	(1.04	)

Comprehensive Loss

We own certain investments that are classified as available-for-sale and reported at market value, with net unrealized gains and losses recorded as components of comprehensive loss.  Additionally, we record the effective portion of certain derivatives’ net unrealized gains and losses as components of comprehensive loss.  Comprehensive loss is presented in the accompanying consolidated statements of changes in stockholders’ equity.  The cumulative amount of comprehensive loss is presented in the accompanying consolidated balance sheets as accumulated other comprehensive loss.

F-9

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

2.  Significant Accounting Policies (continued)

Loss Per Share

Basic loss per share is computed using average shares outstanding during the period.  Diluted loss per share is equal to basic loss per share as we had generated net losses for the years ended December 31, 2002, 2001 and 2000, thereby making the potential effects of dilutive securities anti-dilutive.  Securities that could potentially dilute basic earnings per share in the future include stock options.

Income Taxes

Deferred income taxes are provided for using the liability method. Under this approach, differences between the financial statements and tax bases of assets and liabilities are determined annually, and deferred income tax assets and liabilities are recorded for those differences that have future tax consequences. Valuation allowances are established, if necessary, to reduce deferred tax assets to an amount that will more likely than not be realized in future periods.  Income tax expense is comprised of the current tax payable or refundable for the period plus or minus the net change in deferred tax assets and liabilities.

Marketing and Promotional

Marketing and promotional costs are expensed as incurred.  Marketing and promotional expenses for the years ended December 31, 2002, 2001 and 2000 were $12.7 million, $14.8 million and $13.8million.

Recent Accounting Pronouncements

In May 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”.  SFAS No. 145 eliminates the requirement under SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, to report gains and losses from extinguishments of debt as extraordinary items in the income statement.  Accordingly, gains or losses from extinguishments of debt for fiscal years beginning after May 15, 2002 shall not be reported as extraordinary items unless the extinguishment qualifies as an extraordinary item under the provisions of APB Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions”.  Upon adoption of this pronouncement, any gain or loss on extinguishment of debt previously classified as an extraordinary item in prior periods presented that does not meet the criteria of APB Opinion No. 30 for such classification should be reclassified to conform to the provisions of SFAS No. 145.  In connection with our adoption of this pronouncement on December 31, 2002, we reclassified a loss from early extinguishment of debt of $10.3 million ($6.1 million net of tax) recorded during the year ended December 31, 2001 and a gain of $3.6 million recorded during the year ended December 31, 2002, to results from continuing operations.

F-10

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

2.  Significant Accounting Policies (continued)

In June 2002, the FASB issued SFAS No. 146, “Accounting for Disposal Obligations”, which became effective for us beginning January 1, 2003.  SFAS No. 146 supersedes EITF Issue No. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”.  SFAS No. 146 addresses the accounting for and disclosure of costs to terminate an existing contractual obligation (including but not limited to operating leases), incremental direct and other costs associated with the related disposal activity and termination benefits (severance pay) provided to employees pursuant to a one-time benefit arrangement that does not constitute a preexisting or newly-created ongoing benefit plan.  The adoption of SFAS No. 146 had no impact on our consolidated financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure”, which amends SFAS No. 123, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method used on reported results.  The disclosure provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002 and have been incorporated into these financial statements and accompanying footnotes.

Reclassifications

Under our franchise agreements, we are obligated to pay to local franchising authorities up to 5% of our revenue derived from providing cable and other services the majority of which are passed through to customers.  We have historically recorded revenue net of franchise fees charged to our customers.  Staff Announcement D-103, issued by the FASB in November 2001, specifies that reimbursements received from a customer should be reflected as revenues and not as a reduction of expenses.  This Staff Announcement applies to financial reporting periods beginning after December 15, 2001.  Upon application of this Staff Announcement, comparative financial statements for prior periods are required to be reclassified to comply with the guidance in this Staff Announcement.  Consequently, we have reclassified the prior period amounts in the accompanying consolidated statements of operations to reflect franchise fees on a gross basis with reimbursements as revenue and payments as expense.  The effect on the prior period statements of operations was to increase both revenue and selling, general and administrative costs by $24.0 million for the year ended December 31, 2001 and $13.0 million for the year ended December 31, 2000.

Additionally, certain other prior year amounts have been reclassified to conform to the current year’s presentation.

F-11

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

3.  Insight Midwest

In September 1999, Insight Midwest was formed to serve as the holding company and a financing vehicle for our cable television system 50/50 joint venture with AT&T Broadband (now known as Comcast Cable).  As of December 31, 2002, Insight Midwest was comprised of systems located in Indiana, Kentucky, Ohio, Illinois and Georgia. 

Indiana Systems

On October 31, 1998, Insight LP and AT&T Broadband contributed certain of their cable television systems located in Indiana and Northern Kentucky to form Insight Indiana in exchange for a 50% equity interest.  On October 1, 1999, as part of a joint venture restructuring involving the Kentucky Systems (discussed below), Insight Indiana became a wholly owned subsidiary of Insight Midwest.  Pursuant to the terms of their respective operating agreements, Insight Midwest and Insight Indiana will continue for a twelve-year term through October 1, 2011, unless extended by Insight LP and Comcast Cable.

Kentucky Systems

On October 1, 1999, Insight LP acquired a combined 50% interest in InterMedia Capital Partners VI, LP (the “IPVI Partnership”) from related parties of Blackstone Cable Acquisition Company, LLC, InterMedia Capital Management VI, LLC and a subsidiary and related party of AT&T Broadband, for $341.5 million (inclusive of expenses).  Insight Midwest assumed debt of $742.1 million (the total debt of the IPVI Partnership) in connection with this transaction.  Concurrently with this acquisition, the Kentucky Systems were contributed to Insight Midwest.  Pursuant to the terms of their respective operating agreements, Insight Midwest and Insight Kentucky will continue for a twelve-year term through October 1, 2011, unless extended by Insight LP and Comcast Cable.

Illinois Systems

Effective January 1, 2001, Insight Midwest completed a series of transactions with Insight LP and AT&T Broadband for the acquisition of additional cable television systems, primarily located in the state of Illinois, valued at approximately $2.2 billion (the “AT&T transactions”), inclusive of systems valued at approximately $775.8 million, contributed by Insight LP.  The AT&T transactions were financed through a credit facility established on January 5, 2001, the Midwest Holdings Credit Facility.  As a result of the AT&T transactions, Insight Midwest acquired all of Insight LP’s wholly owned systems serving approximately 280,000 customers, including systems that Insight LP purchased from AT&T Broadband.  At the same time, Insight Midwest acquired from AT&T Broadband systems serving approximately 250,000 customers.

In connection with the systems Insight LP purchased from AT&T Broadband that included approximately 105,000 customers, we recorded the purchased systems’ respective assets and liabilities, including debt incurred in connection with the purchase, at their respective fair values.  The purchase price of $393.5 million was allocated to the cable television assets acquired in relation to their fair values as increases in fixed assets of $52.3 million and franchise costs of $341.2 million.

F-12

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

3.  Insight Midwest (continued)

Concurrently with the completion of Insight LP’s purchase of systems from AT&T Broadband, Insight LP contributed such systems, along with all of its wholly owned systems serving approximately 175,000 customers, to Insight Midwest.  The total value of such contributed systems was $1.2 billion.  The assets and liabilities, including debt assumed, of such contributed systems’ continue to be recorded at their respective carrying values, as these systems remain within the consolidated group.  We recorded a reduction in paid in capital of $113.8 million equal to 50% of the carrying value of such net assets contributed to Insight Midwest, representing the interest owned by AT&T Broadband (minority interest) through its investment in Insight Midwest.

Concurrently, AT&T Broadband contributed directly to Insight Midwest certain Illinois systems serving approximately 250,000 customers. The total value of such contributed systems was $983.3 million.  We recorded an addition to paid in capital and a reduction to our minority interest liability equal to $328.8 million, representing the value of net assets contributed attributable to AT&T Broadband’s 50% interest in Insight Midwest.  Insight Midwest recorded 100% of the assets and liabilities (including debt assumed of $306.2 million) of such systems contributed at their respective fair values.  The fair value of $983.3 million was allocated to the cable television assets acquired in relation to their fair values as increases in fixed assets of $116.1 million and franchise costs of $867.2 million.

Both Insight LP and AT&T Broadband contributed their respective systems to Insight Midwest subject to an amount of indebtedness such that Insight Midwest remains equally owned by Insight LP and AT&T Broadband.  The total debt assumed by Insight Midwest of $654.5 million was financed with the proceeds from the Midwest Holdings Credit Facility.

As part of the AT&T transactions, we exchanged our Claremont, California cable television system, serving approximately 8,400 customers, for AT&T Broadband’s Freeport, Illinois system, serving approximately 10,000 customers, each valued at approximately $38.0 million.  This system exchange was accounted for by Insight LP as a sale of its Claremont system and a purchase of the Freeport system.  We recorded a gain of approximately $34.2 million in connection with this transaction.

Ohio Systems

On August 21, 1998, Insight LP and Coaxial Communications of Central Ohio, Inc. entered into a contribution agreement pursuant to which Coaxial contributed to Insight Ohio (a newly formed limited liability company) substantially all of the assets and liabilities of its cable television systems located in Columbus, Ohio and Insight LP contributed to Insight Ohio $10.0 million in cash.  As a result of the Coaxial Contribution Agreement, Coaxial owned 25% of the non-voting common equity and Insight LP, through its subsidiary Insight Holdings of Ohio, LLC, owned 75% of the non-voting common equity of Insight Ohio.  In addition, Coaxial also received two separate series of voting preferred equity (Series A Preferred Interest—$140 million and Series B Preferred Interest—$30 million) of Insight Ohio.

F-13

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

3.  Insight Midwest (continued)

The Voting Preferred Interests provides for cash distributions to Coaxial and certain of its affiliates as follows: Series A—10% and Series B—12 7/8%.  Insight Ohio cannot redeem the Voting Preferred Interests without the permission of Coaxial; however, Insight Ohio will be required to redeem the Series A Preferred Interests in August 2006 and the Series B Preferred Interest in August 2008. Coaxial has pledged the Series A Preferred Interest as security for $140.0 million of 10% Senior Notes due in 2006 issued by Coaxial and its affiliate.  Coaxial’s majority shareholder has pledged Coaxial’s stock as security for $55.9 million of aggregate principal amount at maturity of 12 7/8% Senior Discount Notes due in 2008 issued by Coaxial’s majority shareholder and its affiliate.  The Senior Notes and Senior Discount Notes are conditionally guaranteed by Insight Ohio.

On August 8, 2000, Insight Ohio purchased Coaxial’s 25% non-voting common equity interest.  The purchase price was 800,000 shares of our common stock and cash in the amount of $2.6 million.  In connection with the purchase, Insight Ohio’s operating agreement was amended to, among other things, remove certain participating rights of the principals of Coaxial and certain of its affiliate.  Additionally, the agreement was amended to incorporate 70% of Insight Ohio’s total voting power into the common equity interests of Insight Ohio and 30% of Insight Ohio’s total voting power into the Preferred Interests of Insight Ohio.

As a result of this transaction, the financial results of Insight Ohio have been consolidated with our financial results effective January 1, 2000, with minority interest recorded for the 25% common interest owned by Coaxial through August 8, 2000.  In connection with this transaction, Insight LP recorded a step-up in fair value of Insight Ohio’s assets of $229.2 million, which represents the difference between the purchase price and its equity in Insight Ohio’s net assets in excess of Insight Ohio’s net assets.  This amount has been allocated to franchise costs and goodwill.

Although the financial results of Insight Ohio for 2000 have been consolidated as a result of this transaction, for financing purposes, Insight Ohio is an unrestricted subsidiary of ours and is prohibited by the terms of its indebtedness from making distributions to us.  Insight Ohio’s conditional guarantee of the Senior Notes and the Senior Discount Notes remains in place.

If at any time the Senior Notes or Senior Discount Notes are repaid or significantly modified, or in any case after August 15, 2008, the principals of the Coaxial Entities may require us to purchase their interests in the Coaxial Entities for a purchase price equal to the difference, if any, of $32.6 million less the then market value of the 800,000 shares of our common stock issued on August 8, 2000.  The fair value of such contingent consideration was $7.1 million.  As of December 31, 2002, the difference between $32.6 million and the market value of such 800,000 shares of our common stock was $22.7 million.

F-14

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

4.  Pro Forma Results of Operations

Our unaudited pro forma results of operations for the years ended December 31, 2001 and 2000, assuming the acquisition of the Illinois systems and the Greenwood, Indiana system occurred as of January 1, 2000 and excluding the effect of the gain on cable system exchange recorded in the year ended December 31, 2001 were as follows (in thousands, except per share amounts):

	Year Ended December 31,
	2001			2000
Revenue	$	728,546		$	680,375
Loss before accrual of preferred interests		(95,340	)		(73,827	)
Net loss attributable to common stockholders		(114,772	)		(92,552	)
Basic and diluted loss per share attributable to common stockholders		(1.91	)		(1.55	)

5.  Investments

SourceSuite and Liberate

Effective November 17, 1999, Insight Interactive entered into a Contribution Agreement with Source Media, Inc., providing for the creation of a joint venture, SourceSuite LLC.  Under the terms of the Contribution Agreement, Source Media contributed its Virtual Modem 2.5 software and the Interactive Channel products and services, including SourceGuide and LocalSource television content.  We contributed $13.0 million in equity financing for 50% of the equity in the joint venture.

On March 3, 2000, pursuant to a merger of the joint venture with a subsidiary of Liberate Technologies, SourceSuite sold all of its VirtualModem assets in exchange for the issuance to each of Insight Interactive and Source Media of 886,000 shares of Liberate common stock.

SourceSuite continues to own and operate its programming assets, LocalSource and SourceGuide, and has preferred content and programming services agreements with Liberate. As a result of this transaction, we recorded a gain on sale of joint venture assets of $80.9 million in the year ended December 31, 2000.  In addition, on December 31, 2000, we recorded an impairment write-down of $74.1 million to reflect an other-than-temporary decline in the value of our investment in Liberate.  This impairment write-down was calculated as the difference between the fair value of the Liberate shares as of December 31, 2000 as compared to March 3, 2000, the date we received the shares.  Further, on December 31, 2002, we recorded an additional impairment write-down of $12.0 million to reflect an other-than-temporary decline in the value of our investment in Liberate.   The carrying amount of our investment in Liberate was $1.3 million and $10.2 million (net of unrealized losses of $3.1 million) as of December 31, 2002 and 2001.

F-15

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

5.  Investments (continued)

In connection with the Contribution Agreement, on November 17, 1999, we purchased 842,105 shares of Source Media common stock at $14.25 per share, representing approximately 6% of Source Media’s outstanding stock, for a purchase price of $12.0 million in cash.  On December 31, 2000, we recorded an impairment write-down of $11.2 million to reflect an other-than-temporary decline in the value of our investment in Source Media.  This impairment write-down was calculated as the difference between the fair value of the Source Media shares on December 31, 2000 as compared to November 17, 1999, the date we purchased the shares.  Fair value was determined using the quoted market price of the stock.  During the year ended December 31, 2001, we wrote-off our remaining investment in Source Media of $842,000.  Source Media has announced that it has terminated operations effective March 14, 2002.

In addition, in October 1999, we purchased $10.2 million face amount of Source Media’s 12% bonds, maturing November 1, 2004, for approximately $4.1 million.  The bond discount of $6.1 million was being amortized to interest income over the life of the bonds.  As of December 31, 2000, we recorded an impairment write-down of $3.3 million to reflect other-than-temporary declines in the value of our investment in Source Media bonds.  Additionally, as of December 31, 2000, we ceased amortization of the bond discount. 

During the year ended December 31, 2001, we recorded additional impairment write-downs of $1.4 million to reflect an other-than-temporary decline in the value of such bonds.  These impairment write-downs were calculated as the difference between the amortized cost of the bonds and their fair value as of the date of write-down.  Fair value was determined using the quoted market price of the bonds.  As of December 31, 2001, the carrying value of these bonds was $410,000. 

For the years ended December 31, 2001 and 2000, we accounted for our investment in SourceSuite under the equity method of accounting.  Accordingly, the accompanying statements of operations for the years ended December 31, 2001 and 2000 include losses of $2.0 million and $3.8 million that represents our 50% share of SourceSuite’s net loss.  As of December 31, 2001, through equity method accounting, our investment in SourceSuite has a carrying value of $741,000.  

On March 14, 2002, Insight Interactive purchased the remaining 50% equity interest in SourceSuite that it did not already own from Source Media by tendering $10.2 million face amount of Source Media’s 12% bonds.  The fair market value of such tendered bonds on March 14, 2002 was $205,000.  The excess of the fair value of SourceSuite’s acquired assets and liabilities over the purchase price of $205,000, totaling $571,000 of negative goodwill, was allocated as a reduction to long-lived assets based on their respective fair values.  The operating results of SourceSuite have been consolidated in the accompanying financial statements effective January 1, 2002.  SourceSuite recorded $323,000 of revenue, net of $1.6 million of intercompany revenue eliminated in consolidation, and $1.7 million of net loss for the year ended December 31, 2002. 

F-16

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

5.  Investments (continued)

AgileTV

AgileTV Corporation is a privately owned company developing a speech recognition system that enables cable television customers to operate their digital set-top boxes using voice recognition technology.

In November 2001, we purchased 3.0 million shares of AgileTV’s Series C redeemable, convertible preferred stock for $7.5 million, which is accounted for under the cost method.  This preferred stock has a liquidation preference equal to $7.5 million.  In connection with this investment, we received 3 million warrants to purchase AgileTV common stock with an exercise price of $2.50 per share and an additional 800,000 warrants with an exercise price of $1.25 per share.

Based on our on-going assessment of potential impairments in our investments in equity securities, as of December 31, 2002, we recorded an impairment charge of $6.0 million related to our investment in AgileTV bringing our carrying value in this investment to $1.5 million as of December 31, 2002. 

6.  Long-Lived Assets

Fixed assets consisted of:

		December 31, 2002			December 31, 2001
		(in thousands)
Land, buildings and improvements		$	37,751		$	36,501
Cable system equipment			1,851,864			1,573,733
Furniture, fixtures and office equipment			16,850			16,019
			1,906,465			1,626,253
Less accumulated depreciation and amortization			(686,214	)		(474,544	)
	Total fixed assets, net	$	1,220,251		$	1,151,709

During the year ended December 31, 2002, we wrote-off approximately $11.1 million related to video-on-demand equipment as a result of transitioning to a new video-on-demand service provider.  This amount was included in depreciation and amortization in our statement of operations. 

Depreciation expense for the years ended December 31, 2002, 2001 and 2000 was $211.8 million, $182.5 million and $135.9 million.

F-17

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

7.  Debt

Debt consisted of:

		December 31, 2002			December 31, 2001
		(in thousands)
Insight Ohio Credit Facility		$	25,000		$	25,000
Insight Midwest Holdings Credit Facility			1,438,000			1,580,000
Insight Midwest 9¾% Senior Notes			385,000			200,000
Insight Midwest 10½% Senior Notes			500,000			500,000
Insight Inc. 12¼% Senior Discount Notes			360,000			400,000
			2,708,000			2,705,000
Less unamortized discount on notes			(126,996	)		(162,524	)
	Total debt	$	2,581,004		$	2,542,476

Insight Ohio Credit Facility

Insight Ohio’s credit facility provides for revolving credit loans of up to $25.0 million.  The Insight Ohio Credit Facility has a six-year maturity from the date of borrowings, with reductions to the amount of the commitment commencing after three years.  Our obligations under the Insight Ohio Credit Facility are secured by substantially all the assets of Insight Ohio.  The Insight Ohio Credit Facility requires Insight Ohio to meet certain financial and other debt covenants.  Loans under the Insight Ohio Credit Facility bear interest, at our option, at the prime rate or at a Eurodollar rate.  In addition to the index rates, we pay an additional margin percentage tied to Insight Ohio’s ratio of total debt to adjusted annualized operating cash flow.  The weighted average interest rates in effect as of December 31, 2002 and 2001 were 3.6% and 4.3%.

Insight Midwest Holdings Credit Facility

On January 5, 2001, through a wholly owned subsidiary of Insight Midwest (“Insight Midwest Holdings”) which holds all of our cable television systems other than the Ohio System, we entered into a credit facility to finance the AT&T transactions and to repay the outstanding indebtedness under our Insight Indiana and Insight Kentucky Credit Facilities.  The Midwest Holdings Credit Facility expires in 2009 and provides for maximum borrowings of $1.75 billion.  Obligations under this credit facility are secured by a pledge of the outstanding equity interests of Insight Midwest Holdings and its subsidiaries.

The Midwest Holdings Credit Facility requires Insight Midwest Holdings to meet certain financial and other debt covenants.  Borrowings under this credit facility bear interest, based on our election, of an Alternative Base Rate (equal to the greater of the Prime Rate or the Federal Funds Effective Rate plus 0.5%) or Adjusted LIBOR (equal to LIBOR multiplied by the Statutory Reserve Rate) plus an additional margin yield tied to Insight Midwest Holdings’ leverage ratio of between 0.5% and 2.75%.  As of

F-18

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

7.  Debt (continued)

December 31, 2002 and 2001, the weighted average interest rate on this credit facility was 4.3% and 5.1%.

On March 25, 2002, we formally requested approval from the lenders of amendments to the leverage ratio covenant to allow Insight Midwest Holdings more flexibility and to increase the aggregate amount that can be distributed to Insight Midwest for the purpose of making investments in Insight Ohio.  In addition, on March 28, 2002, we loaned $100.0 million to Insight Midwest to lower our effective interest rates, $97.0 million of which was contributed to Insight Midwest Holdings in April 2002 for use in paying down the credit facility balance and in funding financing costs associated with the amendments, and $3.0 million of which was contributed to Insight Ohio as of March 28, 2002.  Pursuant to the credit facility amendments, Insight Midwest Holdings is permitted to make distributions to Insight Midwest for the purpose of repaying our loan provided that the leverage ratio is less than 4.25 and there are no defaults existing under the credit facility.  The loan to Insight Midwest bears annual interest of 9%, has a scheduled maturity date of January 31, 2011 and permits prepayments.  On April 18, 2002, the lenders approved these amendments to the credit facility.

On June 6, 2002, a further amendment to the credit facility was entered into which permits distributions by Insight Midwest Holdings to Insight Midwest for the purpose of repaying our $100.0 million loan, without regard to the minimum leverage ratio requirement. 

As a result of the repayment of the Insight Indiana and Insight Kentucky Credit Facilities on January 5, 2001, we recorded a charge of $10.3 million related to the write-off of unamortized deferred financing costs related to these credit facilities.

Insight Midwest Senior Notes

On October 1, 1999 simultaneously with the closing of the purchase of Insight Kentucky, Insight Midwest completed a $200.0 million offering of 9¾% senior notes due in October 2009.  The proceeds of the offering were used to repay certain debt of the IPVI Partnership.  Interest payments on these Senior Notes, which commenced on April 1, 2000, are payable semi-annually on April 1 and October 1. 

On November 6, 2000, Insight Midwest completed a $500.0 million offering of 10½% senior notes due in November 2010.  Insight Midwest received proceeds of $487.5 million, net of an underwriting fee of $5.0 million and a bond discount of $7.5 million that is being amortized through November 2010.  The proceeds of the offering were used to repay a portion of the outstanding debt under the Insight Indiana Credit Facility and Insight Kentucky Credit Facility.  Interest payments on these Senior Notes, which commenced on May 1, 2001, are payable semi-annually on May 1 and November 1.

The Insight Midwest 9¾% and 10½% Senior Notes are redeemable on or after October 1, 2004 and November 1, 2005.  In addition, Insight Midwest can redeem up to 35% of the Insight Midwest 9¾% and 10½% Senior Notes prior to October 1, 2002 and November 1, 2005, with the net proceeds from certain sales of Insight Midwest’s equity.  Each holder of the Insight Midwest Senior Notes may require

F-19

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

7.  Debt (continued)

Insight Midwest to redeem all or part of that holder’s notes upon certain changes of control.  The Insight Midwest Senior Notes are general unsecured obligations and are subordinate to all other liabilities of Insight Midwest, the amounts of which were $1.9 billion and $2.1 billion as of December 31, 2002 and 2001.  The Insight Midwest Senior Notes contain certain financial and other debt covenants.

In May 2000 and September 2001, Insight Midwest completed exchange offers pursuant to which the 9¾% Senior Notes and 10½% Senior Notes were exchanged for identical notes registered under the Securities Act of 1933. 

In December 2002, Insight Midwest completed a $185.0 million add-on offering under the 9¾% Senior Notes indenture.  Insight Midwest received proceeds of $176.9 million, including $3.8 million of interest accruing from October 1, 2002 through the date of issuance that will be repaid to holders of the bonds in the first semi-annual interest payment due on April 1, 2003, and net of an underwriting fee of $3.1 million and a bond discount of $8.8 million that is being amortized through October 2009.  The proceeds of this offering were used to repay a portion of the outstanding revolving loans under the Midwest Holdings Credit Facility.  Since this additional add-on offering occurred under the 9¾% Senior Notes indenture, these additional debt securities and the 9¾% Senior Notes are considered a single series of senior notes with identical terms.

Insight Inc. 12¼% Senior Discount Notes

On February 6, 2001, we completed a $400.0 million offering of 12¼% Senior Discount Notes due in February 2011.  These notes were issued at a discount to their principal amount at maturity resulting in gross proceeds to us of $220.1 million.  We utilized $20.2 million of the proceeds to repay an outstanding intercompany loan from Insight Midwest, which we incurred in connection with the AT&T transactions.

In September 2001, we completed an exchange offer pursuant to which the 12¼% Senior Discount Notes, issued in February 2001, were exchanged for identical notes registered under the Securities Act of 1933. 

In December 2002, we repurchased $40.0 million face amount of the 12¼% Senior Discount Notes at the then accreted value of $27.4 million for $23.2 million, resulting in a gain of $3.6 million, net of the write-off of unamortized deferred financing costs of $616,000.  As of December 31, 2002, the outstanding principal and accreted amounts of these notes were $360.0 million and $247.4 million. 

No cash interest on the discount notes will accrue prior to February 15, 2006.  Thereafter, cash interest on the discount notes will accrue and be paid on February 15 and August 15 of each year, commencing August 15, 2006.  The initial accreted value of the discount notes will increase until February 15, 2006 such that the accreted value will equal the revised outstanding principal amount of $360.0 million on February 15, 2006.

F-20

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

7.  Debt (continued)

Debt Principal Payments

As of December 31, 2002, annual principal payments required on our debt were as follows (in thousands):

2003		$	5,000
2004			80,000
2005			81,250
2006			81,250
2007			81,250
Thereafter			2,379,250
	Total	$	2,708,000

Interest Rate Swap and Collar Agreements

Through December 31, 2002, we entered into interest-rate swap and collar agreements to modify the interest characteristics of our outstanding debt from a floating rate to a fixed rate basis. These agreements involve the payment of fixed rate amounts in exchange for floating rate interest receipts over the life of the agreement without an exchange of the underlying principal amount. The differential to be paid or received is accrued as interest rates change and is recognized as an adjustment to interest expense related to the debt. The related amount payable or receivable is included in other liabilities or assets.

On January 1, 2001, our derivative financial instruments, which were obtained to manage our exposure to interest rate risk, included interest rate swap and collar agreements, which qualified as cash flow hedges.  On January 1, 2001, we recorded as a component of other comprehensive loss a $1.1 million transition adjustment loss (net of $776,000 tax benefit) representing the cumulative effect of adopting SFAS No. 133.  Changes in the fair value of such cash flow hedges are recognized in stockholders’ equity as a component of comprehensive loss.

As of December 31, 2002 and 2001, we had entered into various interest rate swap and collar agreements effectively fixing interest rates between 4.7% and 5.9%, plus the applicable margin, on $435.0 million and $500.0 million notional value of debt.  Of the agreements outstanding as of December 31, 2002, $285.0 million expire in July 2003 and $150.0 million expire in August 2004.  We had $2.7 million and $1.8 million of accrued interest related to these agreements as of December 31, 2002 and 2001.

In February 2003, we entered into two additional interest rate swap agreements whereby we swapped fixed rates under our 9¾% senior notes due in October 2009, for variable rates of 7.7%, plus the applicable margin, on $185.0 million notional value of debt.  These interest rate swaps expire in November 2005.

F-21

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

8.  Supplemental Cash Flow Information

The following amounts were paid in cash during the years ended December 31:

	2002		2001		2000
	(in thousands)
Interest	$	167,703	$	182,747	$	103,100
Income taxes		531		538		657

During the year ended December 31, 2001, we entered into a non-cash investing activity in which our joint venture partner contributed cable systems to Insight Midwest valued at $983.3 million resulting in a non-cash increase in long-lived assets, debt, other liabilities, minority interest and additional paid-in-capital.

During the year ended December 31, 2000, we entered into a non-cash investing activity in which we issued common stock valued at $17.5 million in connection with an acquisition of a cable system resulting in a non-cash increase in long-lived assets, debt and additional paid-in-capital.

9.  Capital Stock

Our authorized capitalization consists of 300,000,000 shares of Class A common stock, par value $.01 per share, 100,000,000 shares of Class B common stock, par value $.01 per share and 100,000,000 shares of preferred stock, par value $.01 per share.  The rights of the holders of Class A and Class B common stock are substantially identical in all respects, except for voting rights.  Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to ten votes per share.

10.  Income Taxes

For the years ended December 31, 2002, 2001 and 2000, we recorded a deferred tax benefit of $0, $47.1 million and $34.3 million.  In addition, for each of the tax years ended December 31, 2002, 2001 and 2000, we recorded a current tax expense related to state and local taxes of approximately $500,000.  Deferred income taxes represent the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. 

F-22

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

10.  Income Taxes (continued)

Significant components of our deferred tax assets and liabilities consisted of the following:

		December 31,
		2002			2001
		(in thousands)
Deferred tax assets:
	Net operating loss carry-forward	$	204,438		$	147,587
	Accounts receivable		—			243
	Investment in unconsolidated affiliates		2,787			2,787
	Unrealized loss on investments		15,847			8,458
	Deferred interest expense		21,336			9,523
	Interest hedges		8,567			9,330
	Capital loss		2,003			—
	Accrued expenses and other liabilities		—			18
Gross deferred tax asset			254,978			177,946
Valuation allowance			(39,364	)		(12,631	)
Net deferred tax asset			215,614			165,315
Deferred tax liabilities:
	Depreciation & amortization		215,614			165,315
Gross deferred tax liability			215,614			165,315
Net deferred tax liability		$	—		$	—

We have provided a full valuation allowance on our deferred tax asset, consisting primarily of net operating loss carryforwards and unrealized losses on investments, due to the uncertainty regarding our realization of such assets in the future.  The increase in the valuation allowance on the deferred tax asset for the year ended December 31, 2002 was $26.7 million.

F-23

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

10.  Income Taxes (continued)

The reconciliation of income tax expense computed at the U.S. federal statutory rate to income tax expense for the years ended December 31, 2002, 2001 and 2000 were as follows:

		Year ended December 31,
		2002			2001			2000
		(in thousands)
Benefit at federal statutory rate		$	(16,147	)	$	(43,438	)	$	(26,116	)
State and local taxes, net			(4,063	)		(8,283	)		(5,258	)
Expenses not deductible for U.S. tax purposes			94			335			70
Non-deductible amortization			—			1,859			726
Preferred interest accrual			(6,837	)		(6,607	)		(6,367	)
Disallowed interest expense			721			581			—
Disallowed compensation deduction			—			647			—
Increase in valuation allowance			26,733			4,059			3,120
	Income tax (benefit) provision	$	501		$	(50,847	)	$	(33,825	)

As of December 31, 2002, we had a net operating loss carry-forward of $498.6 million for U.S. federal income tax purposes.  Our net operating loss began accumulating effective July 26, 1999, the date of our IPO.  The net operating loss will expire in the years 2019 through 2022.

11.  Stock Option Plan and Other Stock Based Compensation

Stock Option Plan

On December 9, 2002, we amended and restated our stock option plan to, among other things, increase the number of authorized shares and to provide for restricted stock awards.  The amendment is subject to ratification at the 2003 Annual Meeting of Stockholders.  As amended, the plan provides for the grant of incentive stock options, nonqualified stock options and restricted shares, as well as other awards such as performance units, performance shares, deferred stock, dividend equivalents and other stock-based awards.

F-24

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

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

Employee stock options vest over five years and expire ten years from the date granted.  The following summarizes stock option activity for the years ended December 31, 2002, 2001 and 2000:

	Options			Weighted Average Exercise Price
Outstanding as of January 1, 2000		2,883,400		$	24.60
Granted		263,000			15.72
Canceled/forfeited		(130,500	)		23.93
Outstanding as of December 31, 2000		3,015,900			23.86
Granted		1,282,840			19.81
Exercised		(14,500	)		16.45
Canceled/forfeited		(126,500	)		18.76
Outstanding as of December 31, 2001		4,157,740			22.79
Granted		1,792,186			11.31
Canceled/forfeited		(145,500	)		19.46
Outstanding as of December 31, 2002		5,804,426		$	19.33

The weighted average fair value of options granted in 2002, 2001 and 2000 was $6.44, $11.30 and $9.43 per share.  As of December 31, 2002, 2001 and 2000, 1,973,969, 1,158,032 and 577,300 of the outstanding options were exercisable with weighted average exercise prices of $23.62, $24.28 and $24.38.  The following summarizes details of outstanding stock options as of December 31, 2002:

Range of Exercise Prices		Number of Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
$7.43 – $9.56			785,500	$	9.03		9.6
$12.83 – $18.99			1,977,210	$	15.45		9.3
$19.77 – $29.18			3,011,716	$	24.45		6.8
	at $30.13		30,000	$	30.13		6.8
			5,804,426	$	19.33		8.0

Pursuant to SFAS No. 123, “Accounting for Stock-Based Compensation”, we have elected to account for employee stock-based compensation under APB Opinion No. 25, “Accounting for Stock Issued to Employees,” using an intrinsic value approach to measure compensation expense.  Accordingly, no compensation expense has been recognized for options granted under the Plan since all options were granted to employees at exercise prices equal to or greater than fair market value on the date of grant.

F-25

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

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

Other Stock Based Compensation

In connection with our IPO, we issued a total of 1,412,181 shares of common stock to our employees.  We recorded non-cash compensation expense of $19.3 million in connection with the issuance of these shares.  In October 1999 and April 2000, we made loans to certain of these employees, the proceeds of which were used to satisfy their individual income tax withholding obligations resulting from their receipt of these shares.  In the aggregate, these loans totaled $14.0 million and were recorded to other non-current assets.  The loans are non-recourse and are represented by notes that are secured by common stock pledges equal to the number of shares each individual received as compensation. 

Through April 1, 2001, the notes charged interest at a rate of 6% per annum.  Subsequent to April 1, 2001, the rate of interest was adjusted to 5% per annum.  The maturity date of the notes has been extended from October 1, 2004 to October 1, 2009.  In any case, the notes become due 180 days following termination of employment.  The proceeds of any sales of the pledged shares must be applied towards early repayment of these loans unless the value of the remaining shares exceeds 200% of the remaining loan amount. 

Accrued interest on these loans since October 1999 continues to be fully reserved as a result of a loan interest forgiveness provision approved by the board of directors, which provides for forgiveness, at our election, of accrued interest on the loans to employees in good standing, as well as gross-up payments related to the employee’s income tax liabilities arising from such forgiveness.  On October 1, 2001, the first interest forgiveness initiative under this provision became effective whereby all accrued interest from October 1, 1999 through September 30, 2001 was forgiven.  Additionally, all income taxes related to such interest forgiveness were paid by us on behalf of the affected employees.  Forgiven interest through September 30, 2001 amounted to $1.6 million.  Income tax liabilities resulting from such forgiven interest through September 30, 2001 amounted to $1.7 million, which is included in our statement of operations as compensation expense.

All accrued interest on the notes from October 1, 2001 through December 23, 2002 was forgiven.  Additionally, we made gross-up payments with respect to the income taxes related to such interest forgiveness on behalf of the affected employees.  Forgiven interest from October 1, 2001 through December 23, 2002 amounted to $867,000, and gross-up payments with respect to the employees’ income tax liabilities resulting from such forgiven interest amounted to $900,000, which amount has been ratably accrued into our statement of operations as compensation expense from October 1, 2001 to December 23, 2002.

In December 2002, the Board of Directors approved a plan whereby each affected employee was offered the opportunity to repay the outstanding loan amounts through surrendering a number of pledged shares with a value equal to the outstanding loan amounts.  In return, the employees would receive shares with a five-year vesting period and separate grants of non-qualified stock options vesting over five and nine year periods.

F-26

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

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

As of December 23, 2002, our President and Chief Operating Officer accepted this offer and surrendered 746,941 shares in full payment of the $9.6 million outstanding principal amount of her loan, and in turn received 450,000 shares of Class B common stock with a five-year vesting period, 600,000 non-qualified stock options vesting equally over five years and 300,000 non-qualified stock options with a cliff vesting after nine years.  All of the stock options issued have an exercise price equal to the closing market value of our common stock on December 23, 2002.  As of December 31, 2002, the shares were recorded as deferred stock compensation on our balance sheet in the amount of $5.9 million.  This deferred compensation will be amortized on a straight-line basis into our operating results as non-cash compensation through December 23, 2007.   

12.  Financial Instruments

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable.  We maintain cash and cash equivalents with various financial institutions.  These financial institutions are located throughout the country and our policy is designed to limit exposure to any one institution.  Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising our customer base.

Fair Value

We used the following methods and assumptions in estimating our fair value disclosures for financial instruments:

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

Debt: The carrying amounts of our borrowings under our credit arrangements approximate fair value as they bear interest at floating rates.  The fair value of Insight Midwest’s 9¾% and 10½% Senior Notes as of December 31, 2002 and 2001 was $364.8 million and $483.0 million and $210.0 million and $540.0 million.  The fair value of Insight Inc. 12¼% Senior Discount Notes was $208.0 million and $234.0 million as of December 31, 2002 and 2001.

Interest rate swap agreements:  As of January 1, 2001, interest rate swap agreements are recorded in our financial statements at fair value.  Prior to January 1, 2001, interest rate swap agreements were not recorded in our financial statements.  The fair value (cost) of such swap agreements was $(17.8) million and $(22.8) million as of December 31, 2002 and 2001.

F-27

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

13.  Related Party Transactions

Managed Systems

On March 17, 2000, we entered into a two-year management agreement with InterMedia Partners Southeast (“IPSE”) (now known as Comcast of Montana/Indiana/Kentucky/Ohio), an affiliate of AT&T Broadband (now known as Comcast Cable), to provide management services to cable television systems acquired by AT&T Broadband.  The management agreement has been extended and expires on June 30, 2003.  As of December 31, 2002, these systems served approximately 114,600 customers in the states of Indiana and Kentucky.  Through March 31, 2001, we earned a monthly fee of 3% of gross revenues for providing such management services.  In September 2001, the management agreement was amended to provide for a monthly fee of 5% of gross revenues retroactive to April 1, 2001.  We recognized management fees in connection with this agreement of $2.7 million, $2.4 million and $1.2 million for the years ended December 31, 2002, 2001 and 2000. 

On September 30, 2002, Insight Communications Midwest signed an agreement with IPSE to exchange the Griffin, Georgia cable television systems, including approximately 13,000 customers, plus $25.0 million for the Managed Systems located in New Albany, Indiana and Shelbyville, Kentucky, together including approximately 23,000 customers.  Additionally, pursuant to the agreement, Insight Communications Midwest will pay $1.5 million as a closing adjustment to IPSE to complete the rebuild and upgrade of the Griffin, Georgia system. 

This system exchange is expected to close on February 28, 2003 and will be accounted for on that date as a sale of the Griffin, Georgia systems and a purchase of the New Albany, Indiana and Shelbyville, Kentucky systems.  In connection with this system exchange, we expect to record a gain of approximately $27.0 million equal to the difference between the fair value and carrying value of the Griffin, Georgia systems as of the closing date.  Of the purchase price of the New Albany, Indiana and Shelbyville, Kentucky systems approximately $32.0 million will be preliminarily allocated to such cable television systems’ assets acquired in relation to their fair values and approximately $33.0 million will be preliminarily allocated to franchise costs.  

Programming

We purchase the majority of our programming through affiliates of AT&T Broadband (now known as Comcast Cable).  Although we have the ability to purchase substantially all our programming through Comcast Cable, we purchase certain programming directly from programmers for strategic and/or cost purposes.  Charges for such programming, including a 1½% administrative fee, were $130.5 million, $116.0 million and $57.4 million for the years ended December 31, 2002, 2001 and 2000.  As of December 31, 2002 and 2001, $22.6 million and $10.3 million of accrued programming costs were due to affiliates of AT&T Broadband.  We believe that the programming rates charged through these affiliates are lower than those available from independent parties.

F-28

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

13.  Related Party Transactions (continued)

Telephone Agreements

In July 2000, to facilitate delivery of telephone services, we entered into a ten-year agreement with AT&T Broadband that allows Insight Midwest to deliver to our customers local telephone service.  Under the terms of the agreement, Insight Midwest leases for a fee certain capacity on our network to AT&T Broadband.  Insight Midwest provides certain services and support for which it receives additional payments.  We began providing telephone services to a limited number of our customers in 2001.  Revenue earned from leased network capacity used in the provision of telephone services was $2.2 million and $170,000 in the years ended December 31, 2002 and 2001.  The capital required to deploy telephone services over our networks is shared, with AT&T Broadband responsible for switching and transport facilities.  AT&T is also required to pay us for installations, marketing and billing support that amounted to $7.6 million and $1.4 million for the years ended December 31, 2002 and 2001. 

Advertising Services

In October 1999, to facilitate the administration of our advertising services in our Kentucky Systems, we entered into an agreement expiring on January 1, 2004 with an affiliate of Comcast Cable, which provides for this affiliate to perform all of our Kentucky advertising sale and related administrative services.  We earned advertising revenues through this affiliate, derived from our Kentucky Systems, of $15.8 million, $12.4 million and $12.8 million for the years ended December 31, 2002, 2001 and 2000.  As of December 31, 2002 and 2001, we had $8.5 million and $6.9 million as a receivable due from this affiliate included in other current assets.  We pay this affiliate a fixed and variable fee for providing this service based on advertising sales cash flow growth.  As of December 31, 2002 and 2001, we had $308,000 and $666,000 recorded as payables to this affiliate related to such services. 

14.  401(k) Plan

We sponsor a savings and investment 401(k) Plan for the benefit of our employees. All employees who have completed six months of employment and have attained age 18 are eligible to participate in the plan.  We make matching contributions equal to 100% of the employee’s contribution excluding any such contributions in excess of 5% of the employee’s wages.  Effective April 1, 2001, 50% of our matching contribution to the plan is in the form of our common stock.  For the years ended December 31, 2002, 2001 and 2000, we matched contributions of $3.2 million, $2.3 million and $957,000.

F-29

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

15.  Commitments and Contingencies

Programming Contracts

We enter into long-term contracts with third parties who provide us with programming for distribution over our cable television systems.  These programming contracts are a significant part of our business and represent a substantial portion of our operating costs.  Since future fees under such contracts are based on numerous variables, including number and type of customers, we have not recorded any liabilities with respect to such contracts.

Lease Agreements

We lease and sublease equipment and office space under various operating lease arrangements expiring through December 31, 2015.  Future minimum rental payments required under such operating leases as of December 31, 2002 were (in thousands):

2003		$	4,185
2004			3,437
2005			2,798
2006			2,449
2007			1,952
Thereafter			4,286
	Total	$	19,107

Rental expense on operating leases for the years ended December 31, 2002, 2001 and 2000 was $5.7 million, $5.5 million and $4.6 million.

Litigation

Insight Kentucky and certain prior owners of the Kentucky Systems have been named in class actions regarding the pass-through of state and local property tax charges to approximately 320,000 customers by the prior owners of the Kentucky Systems.  The plaintiffs seek monetary damages and the enjoinment of the collection of such taxes.  We have entered into agreements with the plaintiffs to settle these lawsuits and have received final court approval in December 2002.  The settlements will not have a material effect on our results of operations or cash flows.

Separately, we have filed a state court action against the City of Louisville for its grant of a more favorable franchise to Knology, Inc.  Our commencement of this action automatically suspended this franchise pending a court determination.  In November 2000, Knology filed a federal court action against us seeking monetary damages and other relief for alleged violations of federal laws arising out of our having filed, pursuant to the provisions of our own franchise from the City, the state court action.  In March 2001, the federal court preliminarily set aside the state court suspension of Knology’s franchise.  We believe we have substantial and meritorious defenses to the asserted federal claims and intend to

F-30

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

15.  Commitments and Contingencies (continued)

defend it vigorously.  Consequently, we have not recorded any loss reserves in the accompanying financial statements. 

We are subject to various legal proceedings that arise in the ordinary course of business. While it is impossible to determine with certainty the ultimate outcome of these matters, it is our opinion that the resolution of these matters will not have a material adverse affect on our consolidated financial condition.

16.  At Home Corporation

On September 28, 2001, At Home Corporation, the former provider of high-speed data services for all of our systems except for those located in Ohio, filed for protection under Chapter 11 of the Bankruptcy Code.  For the purpose of continuing service to existing customers and to resume the provisioning of service to new customers, we entered into an interim agreement with @ Home to extend service through November 30, 2001.  Further, in December 2001, we entered into an additional interim service arrangement whereby we paid $10.0 million to @ Home to extend service for three months through February 28, 2002 that was recorded as expense ratably over the three-month period. 

As a result of these interim arrangements we incurred approximately $2.8 million in excess of our original agreed-to cost for such services rendered during the year ended December 31, 2001.  Additionally, as of December 31, 2001, we recorded an allowance for bad debt of $1.0 million for a net receivable from @ Home in connection with monies @ Home collected from our high-speed data customers on our behalf prior to September 28, 2001.  Additionally, we incurred approximately $4.1 million in excess of our original agreed-to cost for such services rendered during the three months ended March 31, 2002.  These additional costs are included in non-recurring high-speed data service charges in our statement of operations.

In December 2001, we entered into a four-year agreement with AT&T Corporation to provide high-speed data service to all our affected systems.  We transferred all our affected systems to our own regional network that resides on AT&T Corporation’s platform.  Such high-speed data services commenced progressively on a system-by-system basis beginning in February 2002, with all affected systems being served as of March 1, 2002.

F-31

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

17.  Quarterly Financial Data (Unaudited)

	Three months ended												Year ended December 31, 2002
2002	March 31			June 30			September 30			December 31
	(in thousands, except per share amounts)
Revenue	$	192,178		$	200,033		$	204,936		$	210,735		$	807,882
Operating income		29,185			39,824			30,052			39,941			139,002
Net loss		(12,254	)		(6,556	)		(9,013	)		(20,169	)*		(47,992	)
Net loss attributable to common stockholders		(17,209	)		(11,558	)		(14,063	)		(25,269	)*		(68,099	)
Basic and diluted loss per share attributable to common stockholders		(.29	)		(.19	)		(.23	)		(.42	)*		(1.13	)

*  Includes impairment loss of $18.0 million and gain on extinguishment of debt of $3.6 million.

	Three months ended												Year ended December 31, 2002
2001	March 31			June 30			September 30			December 31
	(in thousands, except per share amounts)
Revenue	$	174,226		$	181,247		$	183,466		$	189,399		$	728,338
Operating income		(13,230	)		(14,976	)		(14,122	)		(28,505	)		(70,833	)
Net loss		(1,977	)		(21,874	)		(20,150	)		(30,788	)		(74,789	)
Net loss attributable to common stockholders		(6,743	)		(26,681	)		(24,998	)		(35,799	)		(94,221	)
Basic and diluted loss per share attributable to common stockholders		(.11	)		(.44	)		(.42	)		(.59	)		(1.57	)

F-32

SIGNATURES

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

	INSIGHT COMMUNICATIONS COMPANY, INC.
Date: March 6, 2003	By:	/s/ MICHAEL S. WILLNER
		Michael S. Willner, Vice Chairman and Chief Executive Officer

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

Signatures	Title	Date
/s/ SIDNEY R. KNAFEL
Sidney R. Knafel	Chairman of the Board	March 6, 2003
/s/ MICHAEL S. WILLNER
Michael S. Willner	Vice Chairman and Chief Executive Officer (Principal Executive Officer)	March 6, 2003
/s/ KIM D. KELLY
Kim D. Kelly	President, Chief Operating Officer and Director	March 6, 2003
/s/ DINESH C. JAIN
Dinesh C. Jain	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	March 6, 2003
/s/ DANIEL MANNINO
Daniel Mannino	Senior Vice President and Controller (Principal Accounting Officer)	March 6, 2003
/s/ THOMAS L. KEMPNER
Thomas L. Kempner	Director	March 6, 2003
/s/ JAMES S. MARCUS
James S. Marcus	Director	March 6, 2003
/s/ PRAKASH A. MELWANI
Prakash A. Melwani	Director	March 6, 2003
/s/ DANIEL S. O’CONNELL
Daniel S. O’Connell	Director	March 6, 2003

64

CERTIFICATIONS

I, Michael S. Willner, certify that:

1)	I have reviewed this annual report on Form 10-K of the Registrant;
2)	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3)	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;
4)	The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
		a)	designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
		b)	evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
		c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5)	The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:
		a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and
		b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

65

6) The Registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ MICHAEL S. WILLNER

Michael S. Willner
Vice Chairman and Chief Executive Officer

March 14, 2003

I, Dinesh C. Jain, certify that:

1)	I have reviewed this annual report on Form 10-K of the Registrant;
2)	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3)	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;
4)	The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
		a.	designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
		b.	evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
		c.	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5)	The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:
		a.	all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

66

		b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and
6)	The Registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ DINESH C. JAIN

Dinesh C. Jain
Senior Vice President and Chief Financial Officer

March 14, 2003

67

CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael S. Willner, hereby certify that the annual report on Form 10-K of the Registrant for the year ended December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ MICHAEL S. WILLNER

Michael S. Willner
Vice Chairman and Chief Executive Officer

March 14, 2003

68

CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Dinesh C. Jain, hereby certify that the annual report on Form 10-K of the Registrant for the year ended December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ DINESH C. JAIN

Dinesh C. Jain
Senior Vice President and Chief Financial Officer

March 14, 2003

69

EX-10.1

Exhibit 10.1

The Insight Communications Company, Inc.

1999 Equity Incentive Plan
(formerly the “1999 Stock Option Plan”)

Table of Contents

			Page
Article 1. Effective Date, Objectives and Duration			1
	1.1	Effective Date of the Plan	1
	1.2	Objectives of the Plan	1
	1.3	Duration of the Plan	1
Article 2. Definitions			1
	2.1	“Affiliate”.	1
	2.2	“Award”	2
	2.3	“Award Agreement”	2
	2.4	“CEO”.	2
	2.5	“COO”.	2
	2.6	“Code”	2
	2.7	“Committee” or “Stock Option Committee”.	2
	2.8	“Common Stock”	2
	2.9	“Covered Employee”	2
	2.10	“Deferred Stock”	2
	2.11	“Director Option”	2
	2.12	“Disability”.	2
	2.13	“Dividend Equivalent”.	2
	2.14	“Eligible Person”.	2
	2.15	“Exchange Act”	2
	2.16	“Fair Market Value”.	3
	2.17	“Grant Date”.	3
	2.18	“Grantee”.	3
	2.19	“Incentive Stock Option”	3
	2.20	“including” or “includes”	3
	2.21	“Management Committee”	3
	2.22	“Mature Shares”	3
	2.23	“Non-Employee Director”	3
	2.24	“Other Stock-Based Award”	3
	2.25	“Option”	3
	2.26	“Option Price”	3
	2.27	“Option Term”.	3
	2.28	“ Performance-Based Exception”	4
	2.29	“Performance Measures”	4
	2.30	“Performance Period”.	4
	2.31	“Performance Share” and “Performance Unit”	4
	2.32	“Period of Restriction”	4
	2.33	“Person”	4
	2.34	“Restricted Shares”.	4
	2.35	“Rule 16b-3”.	4
	2.36	“SEC”.	4
	2.37	“Section 16 Non-Employee Director”.	4

	2.38	“Section 16 Person”.	4
	2.39	“Share”.	4
	2.40	“Termination of Affiliation”	4
Article 3. Administration			5
	3.1	Committee.	5
	3.2	Powers of Committee.	5
Article 4. Shares Subject to the Plan, Maximum Awards, and 162(m) Compliance			8
	4.1	Number of Shares Available for Grants	8
	4.2	Adjustments in Authorized Shares and Awards	8
	4.3	Compliance with Section 162(m) of the Code	9
	4.4	Performance-Based Exception Under Section 162(m)	9
Article 5. Eligibility and General Conditions of Awards			11
	5.1	Eligibility	11
	5.2	Award Agreement	12
	5.3	General Terms and Termination of Affiliation	12
	5.4	Nontransferability of Awards	12
	5.5	Cancellation and Rescission of Awards	13
	5.6	Stand-Alone, Tandem and Substitute Awards.	13
	5.7	Compliance with Rule 16b-3	13
	5.8	Deferral of Award Payouts	14
Article 6. Stock Options			14
	6.1	Grant of Options	14
	6.2	Award Agreement	15
	6.3	Option Price	15
	6.4	Grant of Incentive Stock Options	15
	6.5	Payment	16
Article 7. Restricted Shares			17
	7.1	Grant of Restricted Shares	17
	7.2	Award Agreement	17
	7.3	Consideration for Restricted Shares	17
	7.4	Effect of Forfeiture	17
	7.5	Escrow; Legends	17
Article 8. Performance Units and Performance Shares			17
	8.1	Grant of Performance Units and Performance Shares	17
	8.2	Value/Performance Goals	18
	8.3	Earning of Performance Units and Performance Shares	18
Article 9. Deferred Stock			18
	9.1	Grant of Deferred Stock	18
	9.2	Delivery and Limitations	19

ii

	9.3	Forfeiture	19
Article 10. Dividend Equivalents			19
Article 11. Other Stock-Based Awards			19
Article 12. Non-Employee Director Awards			19
	12.1	Exclusive Means for Non-Employee Director Awards	19
	12.2	Director Option	19
	12.3	Election to Receive Director Fees in Shares or Deferred Stock in Lieu of Cash	21
	12.4	Deferral Elections	21
	12.5	Insufficient Number of Shares	23
	12.6	Non-Forfeitability	23
Article 13. Amendment, Modification, and Termination			23
	13.1	Amendment, Modification, and Termination	23
	13.2	Awards Previously Granted	24
Article 14. Withholding			24
	14.1	Required Withholding	24
	14.2	Notification under Code Section 83(b)	25
Article 15. Additional Provisions			25
	15.1	Successors	25
	15.2	Gender and Number	25
	15.3	Severability	25
	15.4	Requirements of Law	25
	15.5	Securities Law Compliance.	25
	15.6	No Rights as a Stockholder	26
	15.7	Nature of Payments	26
	15.8	Non-Exclusivity of Plan	26
	15.9	Governing Law	26
	15.10	Share Certificates	26
	15.11	Unfunded Status of Awards; Creation of Trusts	27
	15.12	Affiliation	27
	15.13	Participation	27
	15.14	Military Service	27
	15.15	Construction	27
	15.16	Headings	27
	15.17	Obligations	27
	15.18	No Right to Continue as Director	28
	15.19	Stockholder Approval	28

iii

INSIGHT COMMUNICATIONS COMPANY, INC.
1999 EQUITY INCENTIVE PLAN

Article 1.
Effective Date, Objectives and Duration

     1.1     Effective Date of the Plan.  Insight Communications Company, Inc., a Delaware corporation (the “Company”), established a stock option plan known as the Insight Communications Company, Inc. 1999 Stock Option Plan.  The Company hereby amends, restates and renames such plan (as so amended, the “Plan”) as set forth herein effective December 9, 2002 (“Effective Date”), subject to approval by the Company’s stockholders. 

     1.2     Objectives of the Plan.  The Plan is intended (a) to allow selected employees and officers of and consultants to the Company and its Affiliates to acquire or increase equity ownership in the Company, thereby strengthening their commitment to the success of the Company and stimulating their efforts on behalf of the Company, and to assist the Company and its Affiliates in attracting new employees, officers and consultants and retaining existing employees, officers and consultants, (b) to provide annual cash incentive compensation opportunities that are competitive with those of other peer corporations, (c) to optimize the profitability and growth of the Company and its Affiliates through incentives which are consistent with the Company’s goals, (d) to provide Grantees with an incentive for excellence in individual performance, and (e) to promote teamwork among employees, officers, consultants and Non-Employee Directors, and (f) to attract and retain highly qualified persons to serve as Non-Employee Directors and to promote ownership by such Non-Employee Directors of a greater proprietary interest in the Company, thereby aligning such Non-Employee Directors’ interests more closely with the interests of the Company’s stockholders.

     1.3     Duration of the Plan.  The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board of Directors of the Company (“Board”) to amend or terminate the Plan at any time pursuant to Article 13 hereof, until the earlier of December 8, 2012, or the date all Shares subject to the Plan shall have been purchased or acquired and the restrictions on all Restricted Stock granted under the Plan shall have lapsed, according to the Plan’s provisions.

Article 2.
Definitions

     Whenever used in the Plan, the following terms shall have the meanings set forth below:

     2.1     “Affiliate” means any Person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with the Company.

     2.2      “Award” means Options (including non-qualified options and Incentive Stock Options and Director Options), Restricted Shares, Performance Units (which may be paid in cash), Performance Shares, Deferred Stock, Dividend Equivalents, orOther Stock-Based Awards granted under the Plan.

     2.3      “Award Agreement” means the written agreement by which an Award shall be evidenced.

     2.4      “CEO” means the Chief Executive Officer of the Company.

     2.5      “COO” means the Chief Operating Officer of the Company.

     2.6      “Code” means the Internal Revenue Code of 1986, as amended from time to time.  References to a particular section of the Code include references to regulations and rulings thereunder and to successor provisions.

     2.7      “Committee” or “Stock Option Committee” has the meaning set forth in Section 3.1.

     2.8      “Common Stock” means the Class A and/or Class B common stock, $0.01 par value, of the Company.

     2.9      “Covered Employee” means a Grantee who, as of the last day of the fiscal year in which the value of an Award is recognizable as income for federal income tax purposes, is one of the group of “covered employees,” within the meaning of Code Section 162(m), with respect to the Company.

     2.10     “Deferred Stock” means a right, granted under Section 9.1 or Article 12, to receive Shares at the end of a specified deferral period.

     2.11     “Director Option” means a non-qualified Option granted to a Non-Employee Director under Article 12.

     2.12     “Disability” means, unless otherwise defined in an Award Agreement, or as otherwise determined under procedures established by the Committee for purposes of the Plan, a disability within the meaning of Section 22(e)(3) of the Code.

      2.13     “Dividend Equivalent” means a right to receive payments equal to dividends or property, if and when paid or distributed, on a specified number of Shares. 

      2.14     “Eligible Person” means any employee (including any officer) of, or non-employee consultant to, or Non-Employee Director of, the Company or any Affiliate, or potential employee (including a potential officer) of, or non-employee consultant to, the Company or an Affiliate.

      2.15     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.  References to a particular section of the Exchange Act include references to successor provisions.

2

      2.16    “Fair Market Value” means (a) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee, and (b) with respect to Shares, unless otherwise determined in the good faith discretion of the Committee, as of any date, (i) the closing price on the date of determination reported in the table entitled “New York Stock Exchange Composite Transactions” contained in The Wall Street Journal (or an equivalent successor table) (or, if no sale of Shares was reported for such date, on the most recent trading day prior to such date on which a sale of Shares was reported); (ii) if the Shares are not listed on the New York Stock Exchange, the closing sales price of the Shares on such other national exchange on which the Shares are principally traded, or as reported by the National Market System, or similar organization, as reported in the appropriate table or listing contained in The Wall Street Journal, or if no such quotations are available, the average of the high bid and low asked quotations in the over-the-counter market as reported by the National Quotation Bureau Incorporated or similar organizations; or (iii) in the event that there shall be no public market for the Shares, the fair market value of the Shares as determined (which determination shall be conclusive) in good faith by the Committee.

      2.17     “Grant Date” means the date on which an Award is granted or, in the case of a grant to an Eligible Person, such later date as specified in advance by the Committee.

      2.18     “Grantee” means a person who has been granted an Award.

     2.19     “Incentive Stock Option” means an Option that is intended to meet the requirements of Section 422 of the Code.

     2.20     “including” or “includes” means “including, without limitation,” or “includes, without limitation,” respectively.

     2.21     “Management Committee” has the meaning set forth in Section 3.1(b).

     2.22     “Mature Shares” means Shares for which the holder thereof has good title, free and clear of all liens and encumbrances, and which such holder either (i) has held for at least six months or (ii) has purchased on the open market.

     2.23     “Non-Employee Director” means a member of the Board who is not an employee of the Company or any Affiliate.

     2.24     “Other Stock-Based Award” means a right, granted under Article 11 hereof, that relates to or is valued by reference to Shares or other Awards relating to Shares.

     2.25     “Option” means an option granted under Article 6 or Article 12 of the Plan.

     2.26     “Option Price” means the price at which a Share may be purchased by a Grantee pursuant to an Option.

     2.27     “Option Term” means the period beginning on the Grant Date of an Option and ending on the date such Option expires, terminates or is cancelled.

3

     2.28     “Performance-Based Exception” means the performance-based exception from the tax deductibility limitations of Code Section 162(m) contained in Code Section 162(m)(4)(C) (including the special provisions for options thereunder).

     2.29     “Performance Measures” has the meaning set forth in Section 4.4.

     2.30     “Performance Period” means the time period during which performance goals must be met.

     2.31     “Performance Share” and “Performance Unit” have the respective meanings set forth in Article 8.

     2.32     “Period of Restriction” means the period during which Restricted Shares are subject to forfeiture if the conditions specified in the Award Agreement are not satisfied.

     2.33     “Person” means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government instrumentality, division, agency, body or department.

     2.34     “Restricted Shares” means Shares that are both subject to forfeiture and are nontransferable if the Grantee does not satisfy the conditions specified in the Award Agreement applicable to such Shares.

     2.35     “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act, as amended from time to time, together with any successor rule. 

     2.36     “SEC” means the United States Securities and Exchange Commission, or any successor thereto.

     2.37     “Section 16 Non-Employee Director” means a member of the Board who satisfies the requirements to qualify as a “non-employee director” under Rule 16b-3.

     2.38     “Section 16 Person” means a person who is subject to potential liability under Section 16(b) of the 1934 Act with respect to transactions involving equity securities of the Company.

     2.39     “Share” means a share of Common Stock, and such other securities of the Company as may be substituted or resubstituted for Shares pursuant to Section 4.2 hereof.

     2.40     “Termination of Affiliation” occurs on the first day on which an individual is for any reason no longer providing services to the Company or an Affiliate in the capacity of an employee, officer or consultant or with respect to an individual who is an employee or officer of or a consultant to an Affiliate, the first day on which such entity ceases to be an Affiliate of the Company.

4

Article 3.
Administration

     3.1    Committee. 

     (a)     Subject to Articles 12 and 13, and to Section 3.2, the Plan shall be administered by a Committee (the “Stock Option Committee” or the “Committee”) appointed by the Board from time to time.  Notwithstanding the foregoing, either the Board or the compensation committee of the Board (the “Compensation Committee”) may at any time and in one or more instances reserve administrative powers to itself as the Committee or exercise any of the administrative powers of the Committee.  To the extent the Board or Compensation Committee considers it desirable to comply with Rule 16b-3 or meet the Performance-Based Exception, the Committee shall consist of two or more directors of the Company, all of whom qualify as “outside directors” within the meaning of Code Section 162(m) and Section 16 Non-Employee Directors.  The number of members of the Committee shall from time to time be increased or decreased, and shall be subject to such conditions, in each case if and to the extent the Board deems it appropriate to permit transactions in Shares pursuant to the Plan to satisfy such conditions of Rule 16b-3 and the Performance-Based Exception as then in effect.

     (b)     The Board or the Compensation Committee may appoint and delegate to another committee (“Management Committee”), to the CEO, or to the COO, any or all of the authority of the Board or the Committee, as applicable, with respect to Awards to Grantees other than Grantees who are executive officers, Non-Employee Directors, or are (or are expected to be) Covered Employees and/or are Section 16 Persons at the time any such delegated authority is exercised.  As of the Effective Date, the authority of the Committee with respect to Awards to Grantees other than Non-Employee Directors and senior vice presidents or higher ranking officers of the Company or any Affiliate shall be delegated to the CEO and the COO.  This delegation shall remain in effect until such time as the Board or the Compensation Committee rescinds or modifies such delegation.

     (c)     Unless the context requires otherwise, any references herein to “Committee” include references to the Stock Option Committee, to the Board or Compensation Committee to the extent either has assumed or exercises administrative powers itself as the Committee pursuant to subsection (a), and the Management Committee, the CEO or the COO to the extent they have been delegated authority pursuant to subsection (b), as applicable; provided that (i) for purposes of Awards to Non-Employee Directors under Article 12, “Committee” shall include only the full Board, and (ii) for purposes of Awards intended to comply with Rule 16b-3 or meet the Performance-Based Exception, “Committee” shall include only the Stock Option Committee or the Compensation Committee.

     3.2     Powers of Committee.  Subject to and consistent with the provisions of the Plan (including Article 12), the Committee has full and final authority and sole discretion as follows; provided that any such authority or discretion exercised with respect to a specific Non-Employee Director shall be approved by the affirmative vote of a majority of the members of the Board, even if not a quorum, but excluding the Non-Employee Director with respect to whom such authority or discretion is exercised:

5

      (a)     to determine when, to whom and in what types and amounts Awards should be granted; provided that grants to Non-Employee Directors shall be made solely pursuant to Article 12;

      (b)     to grant Awards to Eligible Persons in any number, and to determine the terms and conditions applicable to each Award (including the number of Shares or the amount of cash or other property to which an Award will relate, any exercise price, grant price or purchase price, any limitation or restriction, any schedule for or performance conditions relating to the earning of the Award or the lapse of limitations, forfeiture restrictions, restrictions on exercisability or transferability, any performance goals including those relating to the Company and/or an Affiliate and/or any division thereof and/or an individual, and/or vesting based on the passage of time, based in each case on such considerations as the Committee shall determine);

      (c)     to determine the benefit payable under any Performance Unit, Performance Share, Dividend Equivalent, or Other Stock-Based Award and to determine whether any performance or vesting conditions have been satisfied;

      (d)     to determine whether or not specific Awards shall be granted in connection with other specific Awards, and if so, whether they shall be exercisable cumulatively with, or alternatively to, such other specific Awards and all other matters to be determined in connection with an Award;

      (e)     to determine the Option Term;

      (f)      to determine the amount, if any, that a Grantee shall pay for Restricted Shares, whether to permit or require the payment of cash dividends thereon to be deferred and the terms related thereto, when Restricted Shares (including Restricted Shares acquired upon the exercise of an Option) shall be forfeited and whether such shares shall be held in escrow;

      (g)      to determine whether, to what extent and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Shares, other Awards or other property, or an Award may be accelerated, vested, canceled, forfeited or surrendered or any terms of the Award may be waived, and to accelerate the exercisability of, and to accelerate or waive any or all of the terms and conditions applicable to, any Award or any group of Awards for any reason and at any time;

      (h)     to determine with respect to Awards granted to Eligible Persons whether, to what extent and under what circumstances cash, Shares, other Awards, other property and other amounts payable with respect to an Award will be deferred, either at the election of the Grantee or if and to the extent specified in the Award Agreement automatically or at the election of the Committee (whether to limit loss of deductions pursuant to Code Section 162(m) or otherwise);

      (i)       to offer to exchange or buy out any previously granted Award for a payment in cash, Shares or other Award;

      (j)      to construe and interpret the Plan and to make all determinations, including factual determinations, necessary or advisable for the administration of the Plan;

6

      (k)       to make, amend, suspend, waive and rescind rules and regulations relating to the Plan; 

      (l)       to appoint such agents as the Committee may deem necessary or advisable to administer the Plan;

      (m)       to determine the terms and conditions of all Award Agreements applicable to Eligible Persons (which need not be identical) and, with the consent of the Grantee, to amend any such Award Agreement at any time, among other things, to permit transfers of such Awards to the extent permitted by the Plan; provided that the consent of the Grantee shall not be required for any amendment (i) which does not adversely affect the rights of the Grantee, or (ii) which is necessary or advisable (as determined by the Committee) to carry out the purpose of the Award as a result of any new applicable law or change in an existing applicable law, or (iii) to the extent the Award Agreement specifically permits amendment without consent;

      (n)       to cancel, with the consent of the Grantee, outstanding Awards and to grant new Awards in substitution therefor;

      (o)      to impose such additional terms and conditions upon the grant, exercise or retention of Awards as the Committee may, before or concurrently with the grant thereof, deem appropriate, including limiting the percentage of Awards which may from time to time be exercised by a Grantee;

      (p)       to make adjustments in the terms and conditions of, and the criteria in, Awards in recognition of unusual or nonrecurring events (including events described in Section 4.2) affecting the Company or an Affiliate or the financial statements of the Company or an Affiliate, or, except with respect to Awards granted pursuant to Article 12, in response to changes in applicable laws, regulations or accounting principles; provided, however, that in no event shall such adjustment increase the value of an Award for a person expected to be a Covered Employee for whom the Committee desires to have the Performance-Based Exception apply;

      (q)       to correct any defect or supply any omission or reconcile any inconsistency, and to construe and interpret the Plan, the rules and regulations, and Award Agreement or any other instrument entered into or relating to an Award under the Plan; and

      (r)       to take any other action with respect to any matters relating to the Plan for which it is responsible and to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan.

      Any action of the Committee with respect to the Plan shall be final, conclusive and binding on all persons, including the Company, its Affiliates, any Grantee, any person claiming any rights under the Plan from or through any Grantee, and stockholders, except to the extent the Committee may subsequently modify, or take further action not consistent with, its prior action.  If not specified in the Plan, the time at which the Committee must or may make any determination shall be determined by the Committee, and any such determination may thereafter be modified by the Committee.  The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority

7

of the Committee.  The Committee may delegate to officers or managers of the Company or any Affiliate the authority, subject to such terms as the Committee shall determine, to perform specified functions under the Plan (subject to Sections 4.3 and 5.7(c)).

Article 4.
Shares Subject to the Plan, Maximum Awards, and 162(m) Compliance

      4.1      Number of Shares Available for Grants.  Subject to adjustment as provided in Section 4.2, and except as provided in Section 5.6(b) the number of Shares hereby reserved for delivery under the Plan shall be 8,000,000,of which 1,000,000 Shares shall be available for delivery as Restricted Shares.  Immediately prior to the Effective Date, 5,000,000 Shares were available for delivery under the terms of the Insight Communications Company, Inc. 1999 Stock Option Plan, as in effect immediately prior to its amendment to become the Plan (the “Prior Plan”).

      If any Shares subject to an Award granted hereunder (or under the Prior Plan) are forfeited or such Award otherwise terminates without the delivery of such Shares, the Shares subject to such Award, to the extent of any such forfeiture or termination, shall again be available for grant under the Plan.  If any Shares subject to an Award granted hereunder (or under the Prior Plan) are withheld, applied as payment, or sold and the proceeds thereof applied as payment in connection with the exercise of an Award or the withholding or payment of taxes related thereto (“Returned Shares”), such Returned Shares, shall again be available for grant under the Plan.

      The Committee shall from time to time determine the appropriate methodology for calculating the number of Shares to which an Award relates pursuant to the Plan.

      Shares delivered pursuant to the Plan may be, in whole or in part, authorized and unissued Shares, or treasury Shares, including Shares repurchased by the Company for purposes of the Plan.

      4.2      Adjustments in Authorized Shares and Awards.  In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, or other property), recapitalization, forward or reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, consolidation, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of Shares or other securities of the Company or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that any adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (a) the number and type of Shares (or other securities or property) with respect to which Awards may be granted, (b) the number and type of Shares (or other securities or property) subject to outstanding Awards, (c) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award, (d) the number and kind of Shares of outstanding Restricted Shares or relating to any other outstanding Award in connection with which

8

Shares are subject, and (e) the number of Shares with respect to which Awards may be granted to a Grantee, as set forth in Section 4.3; provided, in each case, that with respect to Awards of Incentive Stock Options intended to continue to qualify as Incentive Stock Options after such adjustment, no such adjustment shall be authorized to the extent that such adjustment would cause the Incentive Stock Option to violate Section 424(a) of the Code; and provided further that the number of Shares subject to any Award denominated in Shares shall always be a whole number.

      4.3      Compliance with Section 162(m) of the Code.  To the extent the Committee determines that compliance with the Performance-Based Exception is desirable, the following shall apply:

      (a)       Section 162(m) Compliance.  All Awards granted to persons the Committee believes likely to be Covered Employees shall comply with the requirements of the Performance-Based Exception; provided, however, that to the extent Code Section 162(m) requires periodic shareholder approval of performance measures, such approval shall not be required for the continuation of the Plan or as a condition to grant any Award hereunder after such approval is required.  In addition, in the event that changes are made to Code Section 162(m) to permit flexibility with respect to the Award or Awards available under the Plan, the Committee may, subject to this Section 4.3, make any adjustments to such Awards as it deems appropriate.

      (b)       Annual Individual Limitations.  During the 2002 calendar year, no Grantee may be granted Awards (other than Awards that cannot be satisfied in Shares) with respect to more than 1,450,000 Shares, subjectto adjustment as provided in Section 4.2, and for any calendar year commencing after 2002, no Grantee may be granted Awards (other than Awards that cannot be satisfied in Shares) with respect to more than 850,000Shares, subject to adjustment as provided in Section 4.2 and except as otherwise provided in Section 5.6(b).  The maximum potential value of Awards to be settled in cash or property (other than Shares) that may be granted with respect to any calendar year to any Grantee expected to be a Covered Employee (regardless of when such Award is settled) shall not exceed $5,000,000.  (Thus, Awards that accrue over more than one calendar year (or fiscal year) may exceed the one-year grant limit in the prior sentence at the time of payment or settlement.) 

      4.4      Performance-Based Exception Under Section 162(m).  Unless and until the Committee proposes for stockholder vote and stockholders approve a change in the general performance measures set forth in this Section 4.4, for Awards (other than Options) designed to qualify for the Performance-Based Exception, the objective Performance Measure(s) shall be chosen from among the following:

      (a)        Earnings (either in the aggregate or on a per-share basis);

      (b)        Net income or loss;

      (c)        Operating income or loss;

      (d)        Operating profit;

9

      (e)        Cash flow (as modified or adjusted for purposes of reporting cash flow in accordance with industry practice);

      (f)        Stockholder returns (including return on assets, investments, equity, or gross sales) (including income applicable to common stockholders or other class of stockholders);

      (g)       Return measures (including return on assets, equity, or sales);

      (h)       Earnings before or after either, or any combination of, interest, taxes, depreciation or amortization (EBITDA) (as modified or adjusted for purposes of reporting EBITDA in accordance with industry practice);

      (i)       Gross revenues;

      (j)       Share price (including growth measures and total stockholder return or attainment by the Shares of a specified value for a specified period of time);

      (k)      Reductions in expense levels in each case, where applicable, determined either on a Company-wide basis or in respect of any one or more business units;

      (l)       Net economic value;

      (m)     Market share;

      (n)      Annual net income to common stock;

      (o)      Annual cash flow provided by operations;

      (p)      Changes in annual revenues;

      (q)      Strategic business criteria, consisting of one or more objectives based on meeting specified revenue, market penetration, geographic business expansion goals, objectively identified project milestones, production volume levels, cost targets, and goals relating to acquisitions or divestitures;

      (r)       Economic value added;

      (s)       Sales;

      (t)       Costs;

      (u)      Results of customer satisfaction surveys;

      (v)      Aggregate product price and other product price measures;

      (w)      Safety record;

      (x)       Service reliability;

10

      (y)       Operating and maintenance cost management;

      (z)       Debt rating; and/or

      (aa)    Achievement of business or operational goals such as market share and/or business development;

provided that applicable performance measures may be applied on a pre- or post-tax basis; and provided further that the Committee may, on the Grant Date of an Award intended to comply with the Performance-Based Exception, and in the case of other grants, at any time, provide that the formula for such Award may include or exclude items to measure specific objectives, such as losses from discontinued operations, extraordinary gains or losses, the cumulative effect of accounting changes, acquisitions or divestitures, foreign exchange impacts and any unusual, nonrecurring gain or loss.  For Awards intended to comply with the Performance-Based Exception, the Committee shall set the Performance Measures within the time period prescribed by Section 162(m) of the Code.  The levels of performance required with respect to Performance Measures may be expressed in absolute or relative levels and may be based upon  a set increase, set positive result, maintenance of the status quo, set decrease or set negative result.  Performance Measures may differ for Awards to different Grantees.  The Committee shall specify the weighting (which may be the same or different for multiple objectives) to be given to each performance objective for purposes of determining the final amount payable with respect to any such Award.  Any one or more of the Performance Measures may apply to the Grantee, a department, unit, division or function within the Company or any one or more Affiliates; and may apply either alone or relative to the performance of other businesses or individuals (including industry or general market indices).

      The Committee shall have the discretion to adjust the determinations of the degree of attainment of the pre-established performance goals; provided, however, that Awards which are designed to qualify for the Performance-Based Exception may not (unless the Committee determines to amend the Award so that it no longer qualified for the Performance-Based Exception) be adjusted upward (the Committee shall retain the discretion to adjust such Awards downward).  The Committee may not, unless the Committee determines to amend the Award so that it no longer qualifies for the Performance-Based Exception, delegate any responsibility with respect to Awards intended to qualify for the Performance-Based Exception.  All determinations by the Committee as to the achievement of the Performance Measure(s) shall be in writing prior to payment of the Award.

      In the event that applicable laws change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, and still qualify for the Performance-Based Exception, the Committee shall have sole discretion to make such changes without obtaining stockholder approval. 

Article 5.
Eligibility and General Conditions of Awards

      5.1      Eligibility.  The Committee may in its discretion grant Awards to any Eligible Person, whether or not he or she has previously received an Award.  Each Person who, on any

11

date on which an Award is to be granted pursuant to Article 12, is a Non-Employee Director eligible to be granted an Award pursuant to Article 12 automatically shall be granted an Award pursuant to Article 12 on such date.

      5.2      Award Agreement.  To the extent not set forth in the Plan, the terms and conditions of each Award shall be set forth in an Award Agreement.

      5.3      General Terms and Termination of Affiliation.  The Committee may impose on any Award or the exercise or settlement thereof, at the date of grant or, subject to the provisions of Section 13.2, thereafter, such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine, including terms requiring forfeiture, acceleration or pro-rata acceleration of Awards in the event of a Termination of Affiliation by the Grantee.  Except as may be required under the Delaware General Corporation Law, Awards may be granted for no consideration other than prior and future services.  Except as otherwise determined by the Committee pursuant to this Section 5.3, all Options that have not been exercised, or any other Awards that remain subject to a risk of forfeiture or which are not otherwise vested, or which have outstanding Performance Periods, at the time of a Termination of Affiliation shall be forfeited to the Company.

      5.4      Nontransferability of Awards.

      (a)       Each Award and each right under any Award shall be exercisable only by the Grantee during the Grantee’s lifetime, or, if permissible under applicable law, by the Grantee’s guardian or legal representative or by a transferee receiving such Award pursuant to a qualified domestic relations order (a “QDRO”) as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974 as amended, or the rules thereunder.

      (b)       No Award (prior to the time, if applicable, Shares are delivered in respect of such Award), and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Grantee otherwise than by will or by the laws of descent and distribution (or in the case of Restricted Shares, to the Company) or pursuant to a QDRO, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary to receive benefits in the event of the Grantee’s death shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

      (c)       Notwithstanding subsections (a) and (b) above, to the extent provided in the Award Agreement, Director Options, Deferred Stock, and Awards other than Incentive Stock Options, may be transferred, without consideration, to a Permitted Transferee.  For this purpose, a “Permitted Transferee” in respect of any Grantee means any member of the Immediate Family of such Grantee, any trust of which all of the primary beneficiaries are such Grantee or members of his or her Immediate Family, or any partnership (including limited liability companies and similar entities) of which all of the partners or members are such Grantee or members of his or her Immediate Family; and the “Immediate Family” of a Grantee means the Grantee’s spouse, children, stepchildren, grandchildren, parents, stepparents, siblings, grandparents, nieces and nephews.  Such Award may be exercised by such transferee in accordance with the terms of such Award.  If so determined by the Committee, a Grantee may, in the manner established by the

12

Committee, designate a beneficiary or beneficiaries to exercise the rights of the Grantee, and to receive any distribution with respect to any Award upon the death of the Grantee.  A transferee, beneficiary, guardian, legal representative or other person claiming any rights under the Plan from or through any Grantee shall be subject to and consistent with the provisions of the Plan and any applicable Award Agreement, except to the extent the Plan and Award Agreement otherwise provide with respect to such persons, and to any additional restrictions or limitations deemed necessary or appropriate by the Committee.

      (d)       Nothing herein shall be construed as requiring the Committee to honor a QDRO except to the extent required under applicable law.

      5.5      Cancellation and Rescission of Awards.  Unless the Award Agreement specifies otherwise, the Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict any unexercised Award at any time if the Grantee is not in compliance with all applicable provisions of the Award Agreement and the Plan or if the Grantee has a Termination of Affiliation.

      5.6      Stand-Alone, Tandem and Substitute Awards. 

      (a)       Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for, any other Award granted under the Plan; provided that if the stand-alone, tandem or substitute Award is intended to qualify for the Performance-Based Exception, it must separately satisfy the requirements of the Performance-Based Exception.  If an Award is granted in substitution for another Award or any non-Plan award or benefit, the Committee shall require the surrender of such other Award or non-Plan award or benefit in consideration for the grant of the new Award.  Awards granted in addition to or in tandem with other Awards or non-Plan awards or benefits may be granted either at the same time as or at a different time from the grant of such other Awards or non-Plan awards or benefits. 

      (b)       The Committee may, in its discretion and on such terms and conditions as the Committee considers appropriate in the circumstances, grant Awards under the Plan (“Substitute Awards”) in substitution for stock and stock-based awards (“Acquired Entity Awards”) held by employees of or consultants to another corporation or entity who become Eligible Persons as the result of a merger or consolidation of the employing corporation or other entity (the “Acquired Entity”) with the Company or an Affiliate or the acquisition by the Company or an Affiliate of property or stock of the Acquired Entity immediately prior to such merger, consolidation or acquisition in order to preserve for the Grantee the economic value of all or a portion of such Acquired Entity Award at such price as the Committee determines necessary to achieve preservation of economic value.  The limitations of Sections 4.1 and 4.3 on the number of Shares reserved or available for grants shall not apply to Substitute Awards granted under this subsection (b).

      5.7      Compliance with Rule 16b-3.

      (a)       Six-Month Holding Period Advice.  Unless a Grantee could otherwise dispose of or exercise a derivative security or dispose of Shares delivered under the Plan without incurring

13

liability under Section 16(b) of the Exchange Act, the Committee may advise or require a Grantee to comply with the following in order to avoid incurring liability under Section 16(b):  (i) at least six months must elapse from the date of acquisition of a derivative security under the Plan to the date of disposition of the derivative security (other than upon exercise or conversion) or its underlying equity security, and (ii) Shares granted or awarded under the Plan other than upon exercise or conversion of a derivative security must be held for at least six months from the date of grant of an Award.

      (b)       Reformation to Comply with Exchange Act Rules.  To the extent the Committee determines that a grant or other transaction by a Section 16 Person should comply with applicable provisions of Rule 16b-3 (except for transactions exempted under alternative Exchange Act rules), the Committee shall take such actions as necessary to make such grant or other transaction so comply, and if any provision of this Plan or any Award Agreement relating to a given Award does not comply with the requirements of Rule 16b-3 as then applicable to any such grant or transaction, such provision will be construed or deemed amended, if the Committee so determines, to the extent necessary to conform to the then applicable requirements of Rule 16b-3. 

      (c)       Rule 16b-3 Administration.  Any function relating to a Section 16 Person shall be performed solely by the Committee or the Board if necessary to ensure compliance with applicable requirements of Rule 16b-3, to the extent the Committee determines that such compliance is desired.  Each member of the Committee or person acting on behalf of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by any officer, manager or other employee of the Company or any Affiliate, the Company’s independent certified public accountants or any executive compensation consultant or attorney or other professional retained by the Company to assist in the administration of the Plan. 

      5.8      Deferral of Award Payouts.  The Committee may permit a Grantee to defer, or if and to the extent specified in an Award Agreement require the Grantee to defer, receipt of the payment of cash or the delivery of Shares that would otherwise be due by virtue of the exercise of an Option, the lapse or waiver of restrictions with respect to Restricted Shares, the satisfaction of any requirements or goals with respect to Performance Units or Performance Shares, the lapse or waiver of the deferral period for Deferred Stock, or the lapse or waiver of restrictions with respect to Other Stock-Based Awards.  If any such deferral is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals.  Except as otherwise provided in an Award Agreement, any payment or any Shares that are subject to such deferral shall be made or delivered to the Grantee as specified in the Award Agreement or pursuant to the Grantee’s deferral election.

Article 6.
Stock Options

      6.1      Grant of Options.  Subject to and consistent with the provisions of the Plan, Options may be granted to any Eligible Person in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee.

14

      6.2      Award Agreement.  Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the Option Term, the number of Shares to which the Option pertains, the time or times at which such Option shall be exercisable and such other provisions as the Committee shall determine.

      6.3      Option Price.  The Option Price of an Option under this Plan shall be determined in the sole discretion of the Committee.  Subject to the adjustment allowed under Section 4.2, neither the Committee nor the Board shall have the authority or discretion to change the Option Price of any outstanding Option.

      6.4      Grant of Incentive Stock Options.  At the time of the grant of any Option, the Committee may in its discretion designate that such Option shall be made subject to additional restrictions to permit it to qualify as an Incentive Stock Option.  Any Option designated as an Incentive Stock Option:

      (a)       shall be granted only to an employee of the Company or a Subsidiary Corporation (as defined below);

      (b)       shall have an Option Price of not less than 100% of the Fair Market Value of a Share on the Grant Date, and, if granted to a person who owns capital stock (including stock treated as owned under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or any Subsidiary Corporation (a “10% Owner”), have an Option Price not less than 110% of the Fair Market Value of a Share on its Grant Date;

      (c)       shall be for a period of not more than 10 years (five years if the Grantee is a 10% Owner) from its Grant Date, and shall be subject to earlier termination as provided herein or in the applicable Award Agreement;

      (d)       shall not have an aggregate Fair Market Value (as of the Grant Date) of the Shares with respect to which Incentive Stock Options (whether granted under the Plan or any other stock option plan of the Grantee’s employer or any parent or Subsidiary Corporation (“Other Plans”)) are exercisable for the first time by such Grantee during any calendar year (“Current Grant”), determined in accordance with the provisions of Section 422 of the Code, which exceeds $100,000 (the “$100,000 Limit”);

      (e)       shall, if the aggregate Fair Market Value of the Shares (determined on the Grant Date) with respect to the Current Grant and all Incentive Stock Options previously granted under the Plan and any Other Plans which are exercisable for the first time during a calendar year (“Prior Grants”) would exceed the $100,000 Limit, be, as to the portion in excess of the $100,000 Limit, exercisable as a separate option that is not an Incentive Stock Option at such date or dates as are provided in the Current Grant;

      (f)       shall require the Grantee to notify the Committee of any disposition of any Shares delivered pursuant to the exercise of the Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to holding periods and certain disqualifying dispositions) (“Disqualifying Disposition”), within 10 days of such a Disqualifying Disposition;

15

      (g)       shall by its terms not be assignable or transferable other than by will or the laws of descent and distribution and may be exercised, during the Grantee’s lifetime, only by the Grantee; provided, however, that the Grantee may, to the extent provided in the Plan in any manner specified by the Committee, designate in writing a beneficiary to exercise his or her Incentive Stock Option after the Grantee’s death; and

      (h)       shall, if such Option nevertheless fails to meet the foregoing requirements, or otherwise fails to meet the requirements of Section 422 of the Code for an Incentive Stock Option, be treated for all purposes of this Plan, except as otherwise provided in subsections (d) and (e) above, as an Option that is not an Incentive Stock Option.

      For purposes of this Section 6.4, “Subsidiary Corporation” means a corporation other than the Company in an unbroken chain of corporations beginning with the Company if, at the time of granting the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  Notwithstanding the foregoing and Section 3.2, the Committee may, without the consent of the Grantee, at any time before the exercise of an Option (whether or not an Incentive Stock Option), take any action necessary to prevent such Option from being treated as an Incentive Stock Option.

      6.5      Payment.  Except as otherwise provided by the Committee in an Award Agreement, Options shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares made by any one or more of the following means:

      (a)       cash, personal check or wire transfer;

      (b)       Mature Shares, valued at their Fair Market Value on the date of exercise;

      (c)       with the approval of the Committee, Restricted Shares held by the Grantee for at least six months prior to the exercise of the Option, each such share valued at the Fair Market Value of a Share on the date of exercise; or

      (d)       subject to applicable law (including the prohibited loan provisions of Section 402 of the Sarbanes-Oxley Act of 2002), through the sale of the Shares acquired on exercise of the Option through a broker-dealer to whom the Grantee has submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay for such Shares, together with, if requested by the Company, the amount of federal, state, local or foreign withholding taxes payable by Grantee by reason of such exercise.

The Committee may in its discretion specify that, if any Restricted Shares (“Tendered Restricted Shares”) are used to pay the Option Price, (x) all the Shares acquired on exercise of the Option shall be subject to the same restrictions as the Tendered Restricted Shares, determined as of the date of exercise of the Option, or (y) a number of Shares acquired on exercise of the Option equal to the number of Tendered Restricted Shares shall be subject to the same restrictions as the Tendered Restricted Shares, determined as of the date of exercise of the Option.

16

Article 7.
Restricted Shares

      7.1      Grant of Restricted Shares.  Subject to and consistent with the provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted Shares to any Eligible Person in such amounts as the Committee shall determine.

      7.2      Award Agreement.  Each grant of Restricted Shares shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Restricted Shares granted, and such other provisions as the Committee shall determine.  The Committee may impose such conditions and/or restrictions on any Restricted Shares granted pursuant to the Plan as it may deem advisable, including restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, and/or restrictions under applicable securities laws; provided that such conditions and/or restrictions may lapse, if so determined by the Committee, in the event of the Grantee’s Termination of Affiliation due to death, disability, normal or approved early retirement, or involuntary termination by the Company or an Affiliate without “cause”.

      7.3      Consideration for Restricted Shares.  The Committee shall determine the amount, if any, that a Grantee shall pay for Restricted Shares.

      7.4      Effect of Forfeiture.  If Restricted Shares are forfeited, and if the Grantee was required to pay for such shares or acquired such Restricted Shares upon the exercise of an Option, the Grantee shall be deemed to have resold such Restricted Shares to the Company at a price equal to the lesser of (x) the amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market Value of a Share on the date of such forfeiture.  The Company shall pay to the Grantee the deemed sale price as soon as is administratively practical.  Such Restricted Shares shall cease to be outstanding, and shall no longer confer on the Grantee thereof any rights as a stockholder of the Company, from and after the date of the event causing the forfeiture, whether or not the Grantee accepts the Company’s tender of payment for such Restricted Shares.

      7.5      Escrow; Legends.  The Committee may provide that the certificates for any Restricted Shares (x) shall be held (together with a stock power executed in blank by the Grantee) in escrow by the Secretary of the Company until such Restricted Shares become nonforfeitable or are forfeited and/or (y) shall bear an appropriate legend restricting the transfer of such Restricted Shares under the Plan.  If any Restricted Shares become nonforfeitable, the Company shall cause certificates for such shares to be delivered without such legend.

Article 8.
Performance Units and Performance Shares

      8.1      Grant of Performance Units and Performance Shares.  Subject to and consistent with the provisions of the Plan, Performance Units or Performance Shares may be granted to any Eligible Person in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.

17

      8.2      Value/Performance Goals.  The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units or Performance Shares that will be paid to the Grantee.  With respect to Covered Employees and to the extent the Committee deems it appropriate to comply with Section 162(m) of the Code, all performance goals shall be objective Performance Measures satisfying the requirements for the Performance-Based Exception, and shall be set by the Committee within the time period prescribed by Section 162(m) of the Code and related regulations.

      (a)       Performance Unit.  Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. 

      (b)       Performance Share.  Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant.

      8.3      Earning of Performance Units and Performance Shares.  After the applicable Performance Period has ended, the holder of Performance Units or Performance Shares shall be entitled to payment based on the level of achievement of performance goals set by the Committee.  If a Performance Unit or Performance Share Award is intended to comply with the Performance-Based Exception, the Committee shall certify the level of achievement of the performance goals in writing before the Award is settled.

      At the discretion of the Committee, the settlement of Performance Units or Performance Shares may be in cash, Shares of equivalent value, or in some combination thereof, as set forth in the Award Agreement.

      If a Grantee is promoted, demoted or transferred to a different business unit of the Company during a Performance Period, then, to the extent the Committee determines that the Award, the performance goals, or the Performance Period are no longer appropriate, the Committee may adjust, change, eliminate or cancel the Award, the performance goals, or the applicable Performance Period, as it deems appropriate in order to make them appropriate and comparable to the initial Award, the performance goals, or the Performance Period.

      At the discretion of the Committee, a Grantee may be entitled to receive any dividends or Dividend Equivalents declared with respect to Shares deliverable in connection with grants of Performance Units or Performance Shares which have been earned, but not yet delivered to the Grantee. 

Article 9.
Deferred Stock

      9.1      Grant of Deferred Stock.  Subject to and consistent with the provisions of the Plan, the Committee, at any time and from time to time, may grant Deferred Stock to any Eligible Person, in such amount and upon such terms as the Committee shall determine, including grants at the election of a Grantee to convert Shares to be acquired upon Option exercise, upon lapse of restrictions on Restricted Shares, or vesting of Performance Shares, into such Deferred Stock. 

18

      9.2      Delivery and Limitations.  Delivery of Shares will occur upon expiration of the deferral period specified for the Award of Deferred Stock by the Committee.  In addition, an Award of Deferred Stock shall be subject to such limitations as the Committee may impose, which limitations may lapse at the expiration of the deferral period or at other specified times, separately or in combination, in installments or otherwise, as the Committee shall determine at the time of grant or thereafter. Unless and only to the extent that the Committee shall provide otherwise in the Award Agreement, a Grantee awarded Deferred Stock will have no voting rights but will have the rights to receive Dividend Equivalents in respect of Deferred Stock, which Dividend Equivalents shall be deemed reinvested in additional Shares of Deferred Stock.

      9.3      Forfeiture.  Upon Termination of Affiliation during the applicable deferral period, Deferred Stock that is at that time subject to deferral shall be forfeited to the extent provided in the Award Agreement. 

Article 10.
Dividend Equivalents

      The Committee is authorized to grant Awards of Dividend Equivalents alone or in conjunction with other Awards.  The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares or additional Awards or otherwise reinvested.

Article 11.
Other Stock-Based Awards

      The Committee is authorized, subject to limitations under applicable law, to grant such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan including Shares awarded which are not subject to any restrictions or conditions, convertible or exchangeable debt securities or other rights convertible or exchangeable into Shares, and Awards valued by reference to the value of securities of or the performance of specified Affiliates.  Subject to and consistent with the provisions of the Plan, the Committee shall determine the terms and conditions of such Awards.  Except as provided by the Committee, Shares delivered pursuant to a purchase right granted under this Article 11 shall be purchased for such consideration, paid for by such methods and in such forms, including cash, Shares, outstanding Awards or other property, as the Committee shall determine.

Article 12.
Non-Employee Director Awards

      12.1     Exclusive Means for Non-Employee Director Awards.  Awards to Non-Employee Directors shall be made solely pursuant to this Article 12.

      12.2     Director Option.  Each Non-Employee Director may elect (an “Option Election”) to have all or any portion of his or her annual retainer fee (as in effect from time to time) be paid

19

as an Award of a Director Option.  An Option Election may be made at any time prior to the date annual retainer fees or any portion thereof would otherwise have been paid in cash, subject to such restrictions and advance written filing requirements as the Company may impose.  Each Option Election shall specify the portion of the annual retainer fee to be paid as an Award of a Director Option and shall remain in effect with respect to future annual retainer fees until the Non-Employee Director revokes or changes such Option Election.  Any such revocation or change shall have prospective application only.  Each Director Option and Award thereof shall be subject to the following terms and conditions:

      (a)       Non-Employee Director Status.  A person must be a Non-Employee Director on the Grant Date of a Director Option in order to be granted such Director Option.

      (b)       The Grant Date for each such Director Option shall be the date the annual retainer fee or portion thereof would otherwise have been paid in cash.

      (c)       The number of Shares subject to each such Director Option shall be the amount of the annual retainer fee or portion thereof that would otherwise have been paid in cash on the Grant Date, divided by the per-Share Modified Black-Scholes Value of the Director Option as of the Grant Date, rounding up to the next higher whole number of Shares any fractional portion of a Share equal to or in excess of one-half Share (and otherwise rounding down to the next lower whole number of Shares).  For purposes of this Article 12 “Modified Black-Scholes Value” means the per share fair value of the Director Option determined using the modified Black-Scholes option pricing model or similar option pricing model, and applied on the basis of such risk-free interest rate, expected option life, volatility, average stock price, and other applicable parameters, or formula therefor, as the Company in its sole discretion approves.

      (d)       Option Price.  The Option Price for each Director Option shall be 100 percent of the Fair Market Value of a Share on the Grant Date.

      (e)       Director Option Term.  The Option Term of each Director Option shall expire on the earlier of (i) an anniversary of the Grant Date determined by the Board and uniformly applied to all Director Options granted on a single Grant Date, not later than the tenth anniversary of the Grant Date, or (ii) five years, or such shorter period as the Board may determine, after the date the Grantee ceases to serve as a Non-Employee Director.

      (f)       Vesting and Exercisability.  Each Director Option shall be fully vested and exercisable at any time, or from time to time, throughout the Option Term.

      (g)       Method of Exercise.  A Grantee may exercise a Director Option, in whole or in part, during the Option Term, by giving written notice of exercise to the Human Resources Department of the Company, specifying the Director Option to be exercised and the number of Shares to be purchased, and paying in full the exercise price by any one or any combination of the following means:

                  (i)       in cash, personal check or wire transfer;

                   (ii)     by surrendering Mature Shares having a Fair Market Value at the time of exercise equal to the Option Price for Shares being acquired; or

20

                   (iii)    subject to applicable law (including the prohibited loan provisions of Section 402 of the Sarbanes-Oxley Act of 2002), through the sale of the Shares acquired on exercise of the Option through a broker-dealer to whom the Grantee has submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay for such Shares.

     (h)      Exercise of Director Option for Deferred Stock.  A Non-Employee Director who is entitled to make and  makes a Deferral Election in accordance with Section 12.4 and who pays the Option Price with Mature Shares may exercise his or her option for an equal number of shares of Deferred Stock in lieu of Shares.

     12.3    Election to Receive Director Fees in Shares or Deferred Stock in Lieu of Cash.

      (a)      Payment of Director Fees in Shares.  Pursuant to procedures approved by the Board to implement this Section 12.3 and subject to the approval of the Board in its sole discretion, a Non-Employee Director may elect (“Share Election”) to be paid all or a portion of the cash fees earned in his or her capacity as a Non-Employee Director (including annual retainer fees, meeting fees, fees for service on a Board committee, fees for service as chairman of a Board committee, and any other fees paid to directors) (“Director Fees”) in the form of Shares in lieu of cash.  A Share Election may be made at any time prior to the date Director Fees would otherwise have been paid in cash, subject to such restrictions and advance filing requirements as the Company may impose.  Each Share Election shall specify the portion of the Director Fees to be paid in the form of Shares and shall remain in effect with respect to future Director Fees until the Non-Employee Director revokes or changes such Share Election.  Any such revocation or change shall have prospective application only.  Shares delivered pursuant to a Share Election shall be the whole number of Shares determined by dividing the amount of Director Fees to be paid in Shares by the Fair Market Value of a Share on the date such Director Fees would otherwise be paid (rounding up to the next higher whole number of Shares any fractional portion of a Share equal to or in excess of one-half Share, and otherwise rounding down to the next lower whole number of Shares).

      (b)      Payment of Director Fees in Deferred Stock.  A Non-Employee Director who makes a Deferral Election in accordance with Section 12.4 shall receive all or part (as he or she elects) of his or her Director Fees in the form of a number of shares of Deferred Stock equal to the quotient (rounding up to the next higher whole number of shares, any fractional portion of a Share equal to or in excess of one-half Share, and otherwise rounding down to the next lower whole number of Shares) of the amount of Director Fees to be paid in the form of Deferred Stock divided by the Fair Market Value of a Share on the date such Director Fees would otherwise be paid in cash.

     12.4     Deferral Elections.  Pursuant to procedures approved by the Board to implement this Section 12.4 and subject to the approval of the Board in its sole discretion, a Non-Employee Director may elect (“Deferral Election”) to be paid any or all of the following (“Deferrable Amounts”) in the form of Deferred Stock in lieu of cash or Shares, as applicable:  (i) shares to be delivered on exercise of a Director Option as provided in Section 12.2(e); (ii) Director Fees as provided in 12.3(a); and (iii) Dividend Equivalents on Deferred Stock, as provided in Section 12.4(d).

21

      (a)      Timing of Deferral Elections.  An initial Deferral Election must be filed with the Human Resources Department of the Company no later than December 31 of the year preceding the calendar year in which the Deferrable Amounts to which the Deferral Election applies would otherwise be paid or delivered, subject to such restrictions and advance filing requirements as the Company may impose; provided that any newly elected or appointed Non-Employee Director may file a Deferral Election not later than 30 days after the date such person first became a Non-Employee Director (or at such later time in the year of such election or appointment as the Company shall permit).  A Deferral Election shall be irrevocable as of the filing deadline and shall only apply with respect to Deferrable Amounts otherwise payable after the filing of such election.  Each Deferral Election shall remain in effect with respect to subsequently earned Deferrable Amounts unless the Non-Employee Director revokes or changes such Deferral Election.  Any such revocation or change shall have prospective application only. 

      (b)      Content of Deferral Elections.  A Deferral Election must specify the following:

                 (i)     The number of Shares acquired on exercise of a Director Option or under a Director Stock Grant to be paid in Deferred Stock, or the dollar amount or percentage of Director Fees to be paid in Deferred Stock;

                  (ii)   the date such Deferred Stock shall be paid (subject to such limitations as may be specified by counsel to the Company); and

                  (iii)   whether Dividend Equivalents on Deferred Stock are to be paid in cash or deposited in the form of Deferred Stock to the Non-Employee Director’s Deferral Account (as defined in Section 12.4(c)), to be paid at the time the Deferred Stock to which they relate are paid.

     (c)      Deferral Account.  The Company shall establish an account (“Deferral Account”) on its books for each Non-Employee Director who makes a Deferral Election.  A number of shares of Deferred Stock (determined in the case of a Deferrable Amount otherwise payable in cash, by dividing the amount of cash to be deferred by the Fair Market Value of a Share on the date such cash would otherwise be paid, and rounding up to the next higher whole number of Shares any fractional portion of a Share equal to or in excess of one-half Share, and otherwise rounding down to the next lower whole number of Shares) shall be credited to the Non-Employee Director’s Deferral Account as of each date a Deferrable Amount subject to a Deferral Election would otherwise be paid.  Deferral Accounts shall be maintained for recordkeeping purposes only and the Company shall not be obligated to segregate or set aside assets representing securities or other amounts credited to Deferral Accounts.  The obligation to make distributions of securities or other amounts credited to Deferral Accounts shall be an unfunded unsecured obligation of the Company.

      (d)      Crediting of Dividend Equivalents.  Whenever dividends are paid or distributions made with respect to Shares, Dividend Equivalents shall be credited to Deferral Accounts on all Deferred Stock credited thereto as of the record date for such dividend or distribution.  If the Non-Employee Director has elected cash payment of Dividend Equivalents pursuant to Section 12.4(b), such Dividend Equivalents shall be paid in cash on the payment date of the dividend or distribution.  Otherwise, such Dividend Equivalents shall be credited to the Deferral Account

22

in the form of additional Deferred Stock in a number determined by dividing the aggregate value of such Dividend Equivalents by the Fair Market Value of a Share at the payment date of the dividend or distribution (rounding up to the next higher whole number of Shares any fractional portion of a Share equal to or in excess of one-half Share, and otherwise rounding down to the next lower whole number of Shares).

      (e)      Settlement of Deferral Accounts.  The Company shall settle a Non-Employee Director’s Deferral Account by delivering to the holder thereof (which may be the Non-Employee Director or his or her beneficiary) a number of Shares equal to the whole number of Deferred Stock then credited to such Deferral Account (or a specified portion in the event of any partial settlement); provided that if less than the value of a whole Share remains in the Deferral Account at the time of any such distribution, the number of Shares distributed shall be rounded up to the next higher whole number of Shares if the fractional portion of a Share remaining is equal to or in excess of one-half Share, and otherwise shall be rounded down to the next lower whole number of Shares.  Such settlement shall be made at the time or times specified in the applicable Deferral Election; provided that a Non-Employee Director may further defer settlement of the Deferral Account by filing a new Deferral Election if the new Deferral Election is filed in the calendar year preceding the calendar year in which the Deferred Shares would be payable under the then-current Deferral Election and at least six months before such Deferred Shares would be payable under the then-current Deferral Election.

     12.5     Insufficient Number of Shares.  If at any date insufficient Shares are available under the Plan for the automatic grant of Director Options or Director Stock Grants, or the delivery of Shares in lieu of cash payment of Director Fees, or crediting Deferred Stock pursuant to a Deferral Election, (a) Director Options under Section 12.2 automatically shall be granted proportionately to each Non-Employee Director eligible for such a grant to the extent Shares are then available (provided that no Director Option shall be granted with respect to a fractional number of Shares), and (b) then, if any Shares remain available, Director Fees elected to be received in Shares shall be paid in the form of Shares or deferred in the form of Deferred Stock proportionately among Non-Employee Directors then eligible to participate to the extent Shares are then available.

     12.6     Non-Forfeitability.  The interest of each Non-Employee Director in Director Options or Deferred Stock (and any Deferral Account relating thereto) granted or delivered under the Plan at all times shall be non-forfeitable.

Article 13.
Amendment, Modification, and Termination

     13.1     Amendment, Modification, and Termination.  Subject to Section 13.2, the Board may, at any time and from time to time, alter, amend, suspend, discontinue or terminate the Plan in whole or in part without the approval of the Company’s stockholders, except that (a) any amendment or alteration shall be subject to the approval of the Company’s stockholders if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Shares may then be listed or quoted,

23

and (b) the Board may otherwise, in its discretion, determine to submit other such amendments or alterations to stockholders for approval.

     13.2     Awards Previously Granted.  Except as otherwise specifically permitted in the Plan or an Award Agreement, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Grantee of such Award.

Article 14.
Withholding

     14.1     Required Withholding

      (a)      The Committee in its sole discretion may provide that when taxes are to be withheld in connection with the exercise of an Option, or upon the lapse of restrictions on Restricted Shares, or upon the transfer of Deferred Stock, or upon payment of any other benefit or right under this Plan (the date on which such exercise occurs or such restrictions lapse or such payment of any other benefit or right occurs hereinafter referred to as the “Tax Date”), the Grantee may elect to make payment for the withholding of federal, state and local taxes, including Social Security and Medicare (“FICA”) taxes by one or a combination of the following methods:

                (i)      payment of an amount in cash equal to the amount to be withheld;

                (ii)     delivering part or all of the amount to be withheld in the form of Mature Shares valued at their Fair Market Value on the Tax Date;

                (iii)    requesting the Company to withhold from those Shares that would otherwise be received upon exercise of the Option, upon the lapse of restrictions on Restricted Stock, or upon the transfer of Deferred Stock, a number of Shares having a Fair Market Value on the Tax Date equal to the amount to be withheld; or

                (iv)    withholding from any compensation otherwise due to the Grantee.

The Committee in its sole discretion may provide that the maximum amount of tax withholding upon exercise of an Option to be satisfied by withholding Shares upon exercise of such Option pursuant to clause (iii) above shall not exceed the minimum amount of taxes, including FICA taxes, required to be withheld under federal, state and local law.  An election by Grantee under this subsection is irrevocable.  Any fractional share amount and any additional withholding not paid by the withholding or surrender of Shares or delivery of Mature Shares must be paid in cash.  If no timely election is made, the Grantee must deliver cash to satisfy all tax withholding requirements.

      (b)      Any Grantee who makes a Disqualifying Disposition (as defined in Section 6.4(f)) or an election under Section 83(b) of the Code shall remit to the Company an amount sufficient to satisfy all resulting tax withholding requirements in the same manner as set forth in subsection (a).

24

     14.2     Notification under Code Section 83(b).  If the Grantee, in connection with the exercise of any Option, or the grant of Restricted Shares, makes the election permitted under Section 83(b) of the Code to include in such Grantee’s gross income in the year of transfer the amounts specified in Section 83(b) of the Code, then such Grantee shall notify the Company of such election within 10 days of filing the notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code.  The Committee may, in connection with the grant of an Award or at any time thereafter, prohibit a Grantee from making the election described above.

Article 15.
Additional Provisions

     15.1    Successors.  All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the business and/or assets of the Company.

     15.2    Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural.

     15.3    Severability.  If any part of the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan.  Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

     15.4    Requirements of Law.  The granting of Awards and the delivery of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.  Notwithstanding any provision of the Plan or any Award, Grantees shall not be entitled to exercise, or receive benefits under, any Award, and the Company (and any Affiliate) shall not be obligated to deliver any Shares or deliver benefits to a Grantee, if such exercise or delivery would constitute a violation by the Grantee or the Company of any applicable law or regulation.

     15.5    Securities Law Compliance. 

      (a)      If the Committee deems it necessary to comply with any applicable securities law, or the requirements of any stock exchange upon which Shares may be listed, the Committee may impose any restriction on Awards or Shares acquired pursuant to Awards under the Plan as it may deem advisable.  All certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC, any stock exchange upon which Shares are then listed, any applicable securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.  If so requested by the Company, the Grantee shall make a written representation to the Company that he or she will not sell or offer to sell any Shares unless a

25

registration statement shall be in effect with respect to such Shares under the Securities Act of 1993, as amended, and any applicable state securities law or unless he or she shall have furnished to the Company, in form and substance satisfactory to the Company, that such registration is not required.

      (b)      If the Committee determines that the exercise or nonforfeitability of, or delivery of benefits pursuant to, any Award would violate any applicable provision of securities laws or the listing requirements of any national securities exchange or national market system on which are listed any of the Company’s equity securities, then the Committee may postpone any such exercise, nonforfeitability or delivery, as applicable, but the Company shall use all reasonable efforts to cause such exercise, nonforfeitability or delivery to comply with all such provisions at the earliest practicable date.

     15.6     No Rights as a Stockholder.  No Grantee shall have any rights as a stockholder of the Company with respect to the Shares (other than Restricted Shares) which may be deliverable upon exercise or payment of such Award until such Shares have been delivered to him or her.  Restricted Shares, whether held by a Grantee or in escrow by the Secretary of the Company, shall confer on the Grantee all rights of a stockholder of the Company, except as otherwise provided in the Plan or Award Agreement.  At the time of a grant of Restricted Shares, the Committee may require the payment of cash dividends thereon to be deferred and, if the Committee so determines, reinvested in additional Restricted Shares.  Stock dividends and deferred cash dividends issued with respect to Restricted Shares shall be subject to the same restrictions and other terms as apply to the Restricted Shares with respect to which such dividends are issued.  The Committee may in its discretion provide for payment of interest on deferred cash dividends.

     15.7     Nature of Payments.  Unless otherwise specified in the Award Agreement, Awards shall be special incentive payments to the Grantee and shall not be taken into account in computing the amount of salary or compensation of the Grantee for purposes of determining any pension, retirement, death or other benefit under (a) any pension, retirement, profit-sharing, bonus, insurance or other employee benefit plan of the Company or any Affiliate, except as such plan shall otherwise expressly provide, or (b) any agreement between (i) the Company or any Affiliate and (ii) the Grantee, except as such agreement shall otherwise expressly provide.

     15.8     Non-Exclusivity of Plan.  Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other compensatory arrangements for employees or Non-Employee Directors as it may deem desirable.

     15.9     Governing Law.  The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware, other than its laws respecting choice of law.

     15.10   Share Certificates.  All certificates for Shares delivered under the terms of the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under federal or state securities laws, rules and regulations thereunder, and the rules of any national securities laws, rules and regulations thereunder, and the rules of any

26

national securities exchange or automated quotation system on which Shares are listed or quoted.  The Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions or any other restrictions or limitations that may be applicable to Shares.  In addition, during any period in which Awards or Shares are subject to restrictions or limitations under the terms of the Plan or any Award Agreement, or during any period during which delivery or receipt of an Award or Shares has been deferred by the Committee or a Grantee, the Committee may require any Grantee to enter into an agreement providing that certificates representing Shares deliverable or delivered pursuant to an Award shall remain in the physical custody of the Company or such other person as the Committee may designate.

     15.11   Unfunded Status of Awards; Creation of Trusts.  The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give any such Grantee any rights that are greater than those of a general creditor of the Company; provided, however,that the Committee may authorize the creation of trusts or make other arrangements to meet the Company’s obligations under the Plan to deliver cash, Shares or other property pursuant to any Award which trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines.

     15.12   Affiliation.  Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or any Affiliate to terminate any Grantee’s employment or consulting contract at any time, nor confer upon any Grantee the right to continue in the employ of or as an officer of or as a consultant to the Company or any Affiliate.

     15.13   Participation.  No employee or officer shall have the right to be selected to receive an Award under this Plan or, having been so selected, to be selected to receive a future Award.

     15.14   Military Service.  Awards shall be administered in accordance with Section 414(u) of the Code and the Uniformed Services Employment and Reemployment Rights Act of 1994.

     15.15   Construction.  The following rules of construction will apply to the Plan:  (a) the word “or” is disjunctive but not necessarily exclusive, and (b) words in the singular include the plural, words in the plural include the singular, and words in the neuter gender include the masculine and feminine genders and words in the masculine or feminine gender include the other neuter genders.

     15.16   Headings.  The headings of articles and sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.

     15.17   Obligations.  Unless otherwise specified in the Award Agreement, the obligation to deliver, pay or transfer any amount of money or other property pursuant to Awards under this Plan shall be the sole obligation of a Grantee’s employer; provided that the obligation to deliver or transfer any Shares pursuant to Awards under this Plan shall be the sole obligation of the Company.

27

     15.18   No Right to Continue as Director.  Nothing in the Plan or any Award Agreement shall confer upon any Non-Employee Director the right to continue to serve as a director of the Company.

     15.19   Stockholder Approval.  All Awards granted on or after the Effective Date and prior to the date the Company’s stockholders approve the amended and restated Plan are expressly conditioned upon and subject to approval of the amended and restated Plan by the Company’s stockholders.

28

EX-10.2A

Exhibit 10.2A

AMENDMENT NO. 1 TO CREDIT AGREEMENT
and
AMENDMENT NO. 1 TO GUARANTEE AGREEMENT

          AMENDMENT NO. 1, dated as of April 18, 2002 (this “Amendment”), to and under (i) the Credit Agreement, dated as of January 5, 2001, among Insight Midwest Holdings, LLC, the Lenders party thereto, Bank of America, N.A. and TD Securities (USA), Inc., as Co-Syndication Agents, Fleet National Bank, as Documentation Agent, and The Bank of New York, as Administrative Agent (as amended, supplemented, or otherwise modified, the “Credit Agreement”), and (ii) the Guarantee Agreement (as defined in the Credit Agreement).

RECITALS

          A.          Capitalized terms used herein that are defined in the Credit Agreement shall have the same meanings as therein defined.

          B.          The Borrower has requested that the Administrative Agent agree to amend the Credit Agreement and the Guarantee Agreement as described below and the Administrative Agent is willing to so agree subject to the terms and conditions contained in this Amendment.

          Accordingly, in consideration of the Recitals and the covenants, conditions and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrower and the Administrative Agent hereby agree as follows:

          1.          Section 1.1 of the Credit Agreement is hereby amended by adding the following defined terms in the appropriate alphabetical order:

            “Ohio Distribution Amount” means, as of any date of determination, an amount equal to (i) from the Effective Date through March 31, 2002, $37,000,000, (ii) from April 1, 2002 through December 31, 2002, $57,000,000, (iii) from January 1, 2003 through December 31, 2003, $67,000,000, and (iv) at all times thereafter, $77,000,000.

            “Parent Loan” means the loan made by Insight Holdings, in cash, to the Parent in the principal sum of $100,000,000, as evidenced by the Parent Loan Note.

            “Parent Loan Note” means the promissory note attached hereto as Exhibit J.

          2.          The defined term “Designated Holding Company Debt” contained in Section 1.1 of the Credit Agreement is hereby amended by adding the following sentence to the end thereof:

                       The Parent Loan shall constitute Designated Holding Company Debt.

          3.          The defined term “Consolidated Pro Forma Interest Expense” contained in Section 1.1 of the Credit Agreement is hereby amended by deleting the parenthetical phrase

“(other than any non-cash portion thereof)” in both places in which such phrase appears and inserting the following in its place:

(other than any non-cash portion thereof and, with respect to the Parent Loan, any payment of interest thereon)

          4.          Each of subsections (d), (g) and (h) of Section 7.8 of the Credit Agreement is hereby amended and restated in the form of the following paragraph bearing the same designation:

             (d)     the Borrower may declare and pay dividends and other distributions to holders of its Equity Interests, provided that (1) such distributions are for the sole purpose of paying cash interest that is due and payable on Designated Holding Company Debt (other than the Parent Loan), (2) after giving effect to any such distribution, the Borrower would be in pro forma compliance with all financial covenants including the Pro Forma Debt Service Ratio, and (3) no Default or Event of Default shall be in existence or would result therefrom;

             (g)     the Borrower may make one or more distributions to the Parent to allow the Parent to make investments in Insight Ohio or Insight Ohio Holdings, provided that both immediately before and after giving effect thereto (i) the aggregate sum of all distributions pursuant to this Section 7.8(g) shall not have a fair market value (determined at the time of each such distribution) in excess of the Ohio Distribution Amount, and (ii) no Default shall be in existence or would occur; and

             (h)     the Borrower may make one or more Restricted Payments (i) to the Parent in an aggregate amount not to exceed the initial principal amount of, and capitalized or accrued and unpaid interest from time to time on, the Parent Loan, provided that immediately before and after giving effect to each such Restricted Payment (a) no Default shall be in existence or would result therefrom, and (b) the Leverage Ratio shall and would be less than 4.25:1.00, and (ii) for any purpose, provided that immediately before and after giving effect to each such Restricted Payment (a) no Default shall be in existence or would result therefrom, and (b) the Leverage Ratio shall and would be less than 3.25:1.00.

          5.          Section 7.9 of the Credit Agreement is hereby amended by adding the following phrase immediately before the period at the end of such Section:

, and provided further that this Section shall not apply to any transaction that is permitted under clauses (g) or (h) of Section 7.8.

2

          6.          Section 7.14 of the Credit Agreement is hereby amended and restated in its entirety as follows:

                       Section 7.14     Leverage Ratio

                    The Borrower will not permit the Leverage Ratio at any time during any period set forth below to be greater than the ratio set forth below with respect to such period:

Period	Ratio
Agreement Date through June 30, 2002		5.50:1.00
July 1, 2002 through June 30, 2003		5.25:1.00
July 1, 2003 through June 30, 2004		4.75:1.00
July 1, 2004 through June 30, 2005		4.25:1.00
July 1, 2005 through June 30, 2006		3.75:1.00
July 1, 2006 and thereafter		3.25:1.00

          7.          The Credit Agreement is further amended by adding thereto a new Exhibit J in the form of Exhibit J to this Amendment.

          8.          Section 10 of the Guarantee Agreement is hereby amended by adding the following to the end of such Section:

In addition to the foregoing, (i) the Parent shall use all proceeds of Restricted Payments made by the Borrower pursuant to Section 7.8(g) of the Credit Agreement to make investments in Insight Ohio or Insight Ohio Holdings, (ii) the Parent shall use all proceeds of Restricted Payments made by the Borrower pursuant to Section 7.8(h)(i) of the Credit Agreement to repay the principal of, and capitalized or accrued and unpaid interest on, the Parent Loan, and (iii) the Parent shall not, and shall not permit the Borrower or any Subsidiary thereof, to agree to amend, supplement or otherwise modify the terms of the Parent Loan in any way that would be adverse to the interests of the Lenders, including any amendment, supplement or other modification that would (1) increase the rate or effective rate of interest thereon, (2) add any make-whole or other premium, any prepayment or other penalty or any fee or any other cost or expense with respect thereto, (3) cause any payment in respect of the principal of, or interest (other than interest that is payable-in-kind) on the Parent Loan to be due and payable prior to December 31, 2010, (4) grant or agree to grant any collateral security for the repayment of any principal, interest or other amount in respect of the Parent Loan, or (5) have the Borrower or any Subsidiary issue or agree to issue any Guarantee in respect of all or any portion of the principal, interest or other sum in respect of the Parent Loan.

3

          9.          Paragraphs 1 through 8 above shall not be effective until such time, if any, as each of the following shall have occurred, provided that each of the following shall have occurred on or before May 15, 2002:

             (a)     the Administrative Agent (or its counsel) shall have received from the Issuing Bank, Required Lenders and each of the Loan Parties either (i) a counterpart of this Amendment signed on behalf of such Person or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile transmission of a signed signature page of this Amendment) that such Person has signed a counterpart of this Amendment,

             (b)     the Administrative Agent shall have received from the Borrower a certificate signed by a Financial Officer, acknowledging the Borrower’s receipt, following March 31, 2002, of a capital contribution by the Parent, in cash, in an amount not less than $97,000,000,

             (c)     following March 31, 2002, the Borrower shall have prepaid the aggregate outstanding principal balance of the Revolving Loans by not less than $97,000,000,

             (d)     the Borrower shall have paid to the Administrative Agent, for the account of each Lender that shall execute and deliver this Amendment to the Administrative Agent on or prior to April 18, 2002, an amendment fee equal to 0.10% of the aggregate sum of (i) such Lender’s Revolving Commitment and (ii) the outstanding principal balance of such Lender’s Term Loans, and

             (e)     the Administrative Agent shall have received all other fees and expenses payable by the Loan Parties in connection with this Amendment, including, without limitation, all reasonable fees and disbursements of its counsel to the extent invoiced.

          10.          Each of the Loan Parties hereby (i) reaffirms and admits the validity and enforceability of each Loan Document to which it is a party and its obligations thereunder, and agrees and admits that it has no defense to or offset against any such obligation, and (ii) represents and warrants that, as of the date hereof, (a) it is in compliance with all of the terms, covenants and conditions of each Loan Document to which it is a party, (b) there exists no Default and (c) the representations and warranties made by it in the Loan Documents are true and correct with the same effect as though such representations and warranties had been made on the date hereof.

          11.          This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which, when taken together, shall constitute but one contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

4

          12.          The Credit Agreement, the Guarantee Agreement and the other Loan Documents shall in all other respects remain in full force and effect, and no amendment, consent, waiver, or other modification herein in respect of any term or condition of any Loan Document shall be deemed to be an amendment, consent, waiver, or other modification in respect of any other term or condition of any Loan Document.

          13.          THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURE PAGES FOLLOW]

5

INSIGHT MIDWEST HOLDINGS, LLC
AMENDMENT NO. 1 TO CREDIT AGREEMENT
and
AMENDMENT NO.1 TO GUARANTEE AGREEMENT

               IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

		INSIGHT MIDWEST HOLDINGS, LLC
		By:	INSIGHT MIDWEST L.P., its sole member
		By:	INSIGHT COMMUNICATIONS COMPANY, L.P., its sole general partner
		By:	INSIGHT COMMUNICATIONS COMPANY, INC., its sole general partner
		By:
		Name:	Dinesh C. Jain
		Title:	Senior Vice President and Chief Financial Officer
CONSENTED AND AGREED TO:
INSIGHT MIDWEST L.P.
By:	INSIGHT COMMUNICATIONS COMPANY L.P., its sole general partner
By:	INSIGHT COMMUNICATIONS COMPANY INC., its sole general partner
By:
Name:	Dinesh C. Jain
Title:	Senior Vice President and Chief Financial Officer

INSIGHT MIDWEST HOLDINGS, LLC
AMENDMENT NO.1 TO CREDIT AGREEMENT
and
AMENDMENT NO.1 TO GUARANTEE AGREEMENT

CONSENTED AND AGREED TO:
INSIGHT COMMUNICATIONS MIDWEST, LLC
By:	INSIGHT MIDWEST HOLDINGS, LLC, its sole member
By:	INSIGHT MIDWEST L.P., its sole member
By:	INSIGHT COMMUNICATIONS COMPANY, L.P., its sole general partner
By:	INSIGHT COMMUNICATIONS COMPANY, INC., its sole general partner
By:
Name:	Dinesh C. Jain
Title:	Senior Vice President and Chief Financial Officer
CONSENTED AND AGREED TO:
INSIGHT COMMUNICATIONS OF KENTUCKY, L.P.
By:	INSIGHT MIDWEST HOLDINGS, LLC, its general partner
By:	INSIGHT MIDWEST, L.P., its sole member
By:	INSIGHT COMMUNICATIONS COMPANY, L.P., its general partner
By:	INSIGHT COMMUNICATIONS COMPANY, INC., its general partner
By:
Name:	Dinesh C. Jain
Title:	Senior Vice President and Chief Financial Officer

INSIGHT MIDWEST HOLDINGS, LLC
AMENDMENT NO.1 TO CREDIT AGREEMENT
and
AMENDMENT NO.1 TO GUARANTEE AGREEMENT

CONSENTED AND AGREED TO:
INSIGHT KENTUCKY PARTNERS I, L.P.
By:	INSIGHT COMMUNICATIONS OF KENTUCKY, L.P., its general partner
By:	INSIGHT MIDWEST HOLDINGS, LLC, its general partner
By:	INSIGHT MIDWEST, L.P., its sole member
By:	INSIGHT COMMUNICATIONS COMPANY, L.P., its general partner
By:	INSIGHT COMMUNICATIONS COMPANY, INC., its general partner
By:
Name:	Dinesh C. Jain
Title:	Senior Vice President and Chief Financial Officer
CONSENTED AND AGREED TO:
INSIGHT KENTUCKY PARTNERS II, L.P.
By:	INSIGHT KENTUCKY PARTNERS I, L.P., its general partner
By:	INSIGHT COMMUNICATIONS OF KENTUCKY, L.P., its general partner
By:	INSIGHT MIDWEST HOLDINGS, LLC, its general partner
By:	INSIGHT MIDWEST L.P., its sole member
By:	INSIGHT COMMUNICATIONS COMPANY, L.P., its sole general partner
By:	INSIGHT COMMUNICATIONS COMPANY, INC., its sole general partner
By:
Name:	Dinesh C. Jain
Title:	Senior Vice President and Chief Financial Officer

INSIGHT MIDWEST HOLDINGS, LLC
AMENDMENT NO.1 TO CREDIT AGREEMENT
and
AMENDMENT NO.1 TO GUARANTEE AGREEMENT

THE BANK OF NEW YORK , individually, as Issuing Bank and as Administrative Agent

By:

Name:

Title:

INSIGHT MIDWEST HOLDINGS, LLC
AMENDMENT NO.1 TO CREDIT AGREEMENT
and
AMENDMENT NO.1 TO GUARANTEE AGREEMENT

	CONSENTED AND AGREED TO:
	[_______________________]
By:
Name:
Title:

Exhibit J

INSIGHT MIDWEST HOLDINGS, LLC
AMENDMENT NO.1 TO CREDIT AGREEMENT
and
AMENDMENT NO.1 TO GUARANTEE AGREEMENT

PROMISSORY NOTE

$100,000,000	March 28, 2002
	New York, New York

               FOR VALUE RECEIVED, the undersigned, Insight Midwest, L.P., a Delaware limited partnership (the “Borrower”), hereby promises to pay to the order of Insight Communications Company, Inc., a Delaware corporation (the “ Lender”), the aggregate principal amount of $100,000,000 (the “Loan”), and to pay interest from the date hereof on the principal balance of the Loan from time to time outstanding at a rate per annum equal to 9%, compounded semi-annually, at the office of the Lender located at 810 Seventh Avenue, New York, New York, or at such other place as the Lender may specify from time to time, in lawful money of the United States of America in immediately available funds, with the unpaid principal balance of the Loan and accrued and unpaid interest under this Note to be paid on January 31, 2011. Interest will be computed on the basis of a year of 360 days.

               This Note may be prepaid in whole or in part at any time without premium or penalty.  All payments on this Note will be applied first to any unpaid interest accrued at the time of payment (including compounded interest) and then to principal.  Any payment received after 11:30 a.m., New York City time will be deemed to have been received on the next succeeding business day for purposes of calculating interest under this Note.

               The Borrower hereby waives presentment, demand, notice of dishonor, protest, notice of protest and all other demands, protests and notices in connection with the execution, delivery, performance, collection and enforcement of this Note. 

               Whenever in this Note either party hereto is referred to, such reference shall be deemed to include the successors and assigns of such party.  The Borrower shall not have the right to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void), except as expressly permitted in writing by the Lender.  No failure or delay of the Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  Neither this Note nor any provision hereof may be waived, amended or modified, nor shall any departure therefrom be consented to, except pursuant to a written agreement with respect to which such waiver, amendment, modification or consent is to apply, entered into between the Borrower and the Lender.

               THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

               THE BORROWER, AND BY ACCEPTING THIS NOTE, THE LENDER, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION

INSIGHT MIDWEST HOLDINGS, LLC
AMENDMENT NO.1 TO CREDIT AGREEMENT
and
AMENDMENT NO.1 TO GUARANTEE AGREEMENT

DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE.  THE BORROWER (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT SUCH LENDER HAS BEEN INDUCED TO ACCEPT THIS NOTE AND ENTER INTO THE LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.

               IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

INSIGHT MIDWEST, L.P.
By:	INSIGHT COMMUNICATIONS COMPANY, L.P., General Partner
By:	INSIGHT COMMUNICATIONS COMPANY, INC., General Partner
By:
Name:
Title:

EX-10.22

Exhibit 10.22

SECOND AMENDED AND RESTATED
NON-RECOURSE SECURED PROMISSORY NOTE
(“Note”)
Due October 1, 2009

[Amount]

          FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to the order of Insight Communications Company, Inc., a Delaware corporation, or its successor (the “Lender”), the principal sum of ____________ ($______) in lawful money of the United States of America on October 1, 2009 (the “Maturity Date”), and to pay interest at a rate of 5.07% per annum (the “Interest Rate”) on the unpaid principal amount hereof from time to time outstanding from and after the date of this Note until the entire principal amount hereof has been paid in full, payable in arrears commencing October 1, 2001 and on each anniversary thereof in each year thereafter (each an “Interest Payment Date”).

          Reference is hereby made to (i) that certain Non-Recourse Secured Promissory Note, dated as of October 1, 1999, made by the Borrower to the order of the Lender (the “1999 Note”), (ii) that certain Non-Recourse Secured Promissory Note, dated as of April 10, 2000, made by the Borrower to the order of the Lender (the “2000 Note”) and (iii) that certain Amended and Restated Non-Recourse Secured Promissory Note, dated as of April 1, 2001, amending and restating the 1999 Note and incorporating therein the Borrower’s obligation to pay to Lender the principal sum of $_____________ pursuant to the 2000 Note (the “2001 Note”).  The Borrower and the Lender hereby agree that the maturity date of the 2001 Note be extended to October 1, 2009, and that the terms of the 2001 Note shall be amended and restated as set forth herein.  Upon execution of this Note, the 2001 Note shall be cancelled.

          Reference also is made to that certain Pledge Agreement, dated as of October 1, 1999 between the Borrower and the Lender (the “Pledge Agreement”), pursuant to which the Borrower has pledged certain securities (the “Pledged Shares”) to the Lender to secure payment of the 1999 Note and the 2000 Note, reference to which is made for a description of the entire collateral provided thereby (the “Pledged Collateral”) and the rights of the Lender in respect of the Pledged Collateral.  The Borrower hereby confirms the continuing security interest with respect thereto conferred by the Pledge Agreement, and confirms that the Pledge Agreement shall remain unchanged and in full force and effect. 

          The Borrower shall not have any personal liability of any kind for the repayment of the indebtedness evidenced by this Note or for any claim of any kind based thereon or relating thereto, and the Lender shall be entitled to and shall look solely to the Pledged Collateral as its sole and exclusive remedy, including any cash or non-cash proceeds therefrom, for the repayment of the indebtedness evidenced by this Note and any other claim of any kind relating thereto or to the Pledge Agreement or arising hereunder or thereunder.

          This Note is subject to the following further terms and conditions:

          1.     Mandatory Prepayments.

                  (a)     The outstanding principal of this Note shall be mandatorily prepaid, together with accrued and unpaid interest thereon, (i) upon the sale of any of the Pledged Shares, other than pursuant to (A) a “Permitted Sale” (as defined below) or (B) a “Qualifying Sale” under Section 2 hereof, to the extent of the “Net Proceeds” of such sale, and (ii) upon the payment of any cash distributions or cash dividends with respect to any Pledged Shares, to the extent of the “Net Distribution” of such distribution.  “Net Proceeds” shall mean the proceeds of the sale of any of the Pledged Shares after deduction for (i) all expenses paid or payable in connection with such sale, and (ii) any taxes payable with respect to such sale.  “Net Distribution” shall mean the amount of the cash distribution or cash dividends after deduction for any taxes payable with respect to such cash distributions or cash dividends.

                  (b)     The Borrower may dispose of a portion of the Pledged Shares (a “Permitted Sale”) and not be required to use the Net Proceeds to prepay principal of this Note, to the extent that, immediately after giving effect to such Permitted Sale, the fair market value of the remaining Pledged Shares is equal to or greater than 200% of the excess of $______ over the amount of any repayment(s) made by Borrower prior to, or in connection with, such Permitted Sale.  The Lender shall release from the Pledged Collateral, free and clear of the Lender’s security interest therein, that number of Pledged Shares (the “Released Shares”) to be disposed of by the Borrower in connection with any Permitted Sale.  The Lender shall acknowledge such release by amending Attachment I to the Pledge Agreement to remove such Released Shares from the definition of “Collateral” under the Pledge Agreement.

                  (c)     Any repayments made under this Section 1 shall be first applied to the payment of any unpaid and accrued interest and then to the payment of the principal amount outstanding hereunder.

                  (d)          Concurrently with any repayment of any portion of the principal amount of this Note pursuant to this Section 1 hereof, the Lender shall make a notation of such payment on the Loan and Repayment Schedule (as defined in Section 8 hereof).

                  (e)     Upon repayment of this Note in full, together with accrued interest thereon, this Note shall be cancelled by the Lender.  Any principal and accrued interest which remains outstanding hereunder upon the sale of all of the Pledged Shares pursuant to this Section 1 (and upon prepayment of this Note as set forth in paragraph (a)) shall be forgiven by the Lender, but only to the extent that such sales were in bona fide arm’s length transactions with third parties other than family members or Affiliates (as defined in the Pledge Agreement) and effected with the objective of maximizing the price obtained for the Pledged Shares sold.

          2.     Qualifying Sale.

- 2 -

                  (a)     In the event of a disposition of the Pledged Shares pursuant to a Qualifying Taxable Sale, (i) the Lender shall forgive the accrued and unpaid interest on the Note and the portion of the principal of this Note that represents the excess of the principal amount over the LTCG Amount, and (ii) within thirty days of the consummation of the Qualifying Taxable Sale, the Borrower shall mandatorily prepay the remaining principal of this Note.  The LTCG Amount equals the excess of (x) the amount obtained by multiplying the amount realized by the Borrower in connection with the Qualifying Taxable Sale by the maximum federal and state long-term capital gains tax rate (the “Capital Gains Rate”) over (y) the amount (positive or negative) obtained by multiplying the gain or loss “recognized” by the Borrower in connection with the Qualifying Taxable Sale (i.e., the amount realized less the Borrower’s basis in the Pledged Shares) by the Capital Gains Rate.

                  (b)     In the event of a disposition of the Pledged Shares pursuant to a Qualifying Tax-Free Sale, (i) the Lender shall forgive the accrued and unpaid interest on the Note and that portion of the principal of this Note that represents the excess of the principal amount over fifty percent (50%) of the amount obtained by multiplying the amount realized by the Borrower in connection with the Qualifying Tax-Free Sale by the Capital Gains Rate, and (ii) within thirty days of the consummation of the Qualifying Tax-Free Sale, the Borrower shall mandatorily prepay the remaining principal of this Note. 

                  (c)     In the event of a disposition of the Pledged Shares pursuant to a Qualifying Sale, except as provided in Section 1(b), the amount forgiven pursuant to section 2(a) or 2(b), as appropriate, shall be increased by the taxes actually paid by Borrower (by withholding or actual payment) as a result of Borrower’s receipt of shares of Lender on July 26, 1999 and shall be decreased by the amount Borrower borrowed from the Lender to pay such taxes (i.e., the sum of the original principal amount of the 1999 Note and the original principal amount of the 2000 Note)(the “Increased Forgiveness”).

                  (d)     For purposes of this Note,

                            (i)  “Qualifying Sale” shall mean the occurrence of any of the following:

                                           (A)  the distribution of proceeds to the shareholders of the Lender in connection with the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Lender to any “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”);

                                           (B)  the liquidation or dissolution of the Lender;

                                           (C)  the disposition of the Pledged Shares in connection with the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person becomes the “beneficial owner” (as that term is defined Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial

- 3 -

ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Lender entitled to vote in the election of the Board of Directors of the Lender, measured by voting power rather than number of shares; or

                                           (D)  the Lender consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Lender, in any such event pursuant to a transaction in which the Pledged Shares are converted into or exchanged for cash, securities or other property, other than any such transaction where the voting securities of the Lender outstanding immediately prior to such transaction are converted into or exchanged for voting securities of the surviving or transferee Person constituting 50% or more of the combined voting power of the outstanding shares of such voting securities of such surviving or transferee Person (immediately after giving effect to such issuance).

                             (ii)  “Qualifying Taxable Sale” shall mean a Qualifying Sale, but only to the extent that the Borrower currently recognizes gain or loss.

                             (iii) “Qualifying Tax-Free Sale” shall mean a Qualifying Sale, but only to the extent the Borrower does not currently recognize gain or loss.

                  (e)     In the event all or a portion of this Note is forgiven pursuant to this Section 2, Lender shall pay to the Borrower such additional compensation (the “Gross-Up Payment”) as is necessary (after taking into account all federal, state, and local income taxes payable by the Borrower as a result of the receipt of such additional compensation) to place the Borrower in the same after-tax position the Borrower would have been in had no income resulted from the forgiveness of this Note.  For purposes of determining the amount of the Gross-Up Payment, the Borrower shall be deemed to pay taxes at the highest marginal rate of taxation.  Lender shall withhold from the Gross-Up Payment all federal, state, local and other taxes as shall be required by any law or governmental regulation or ruling.

                  (f)     If, in connection with a Qualifying Tax-Free Sale, taking into account the Increased Forgiveness pursuant to Section 2(c), Borrower’s total forgiveness would exceed the principal amount of this Note, the Lender shall pay to the Borrower an amount equal to such excess plus a Gross-Up Payment such that (after taking into account all federal, state, and local income taxes payable by the Borrower as a result of the receipt of the Gross-Up Payment) Borrower will be in the same after-tax position the Borrower would have been in had the Lender’s payment of such excess to the Borrower not been income to the Borrower.  For purposes of determining the amount of the Gross-Up Payment, the Borrower shall be deemed to pay taxes at the highest marginal rate of taxation.  Lender shall withhold from the Gross-Up Payment all federal, state, local and other taxes as shall be required by any law or governmental regulation or ruling.

- 4 -

          3.     Termination of Employment.

                  (a)     The entire principal amount outstanding, and any accrued and unpaid interest, shall be due and payable on the earliest of (i) the Maturity Date, or (ii) except as set forth in Section 3(b), six months following the termination of the Borrower’s employment.

                  (b)     In the event that the Borrower’s employment with the Lender terminates by reason of death or permanent disability or the Borrower’s employment is terminated other than for cause on or within one year after a “change in control” in which the Borrower did not sell, exchange or otherwise dispose of the Pledged Shares, the Lender shall forgive repayment of the entire principal amount outstanding, and any accrued and unpaid interest.  In the event this Note is forgiven pursuant to this Section 3(b), Lender shall pay to the Borrower or his or her beneficiaries a Gross-Up Payment such that (after taking into account all federal, state, and local income taxes payable by the Borrower as a result of the receipt of such additional compensation) Borrower will be in the same after-tax position the Borrower would have been in had no income resulted from the forgiveness of this Note.  For purposes of determining the amount of the Gross-Up Payment, the Borrower shall be deemed to pay taxes at the highest marginal rate of taxation.  Lender shall withhold from the Gross-Up Payment all federal, state, local and other taxes as shall be required by any law or governmental regulation or ruling.

                  (c)     For purposes of this Agreement, “change in control” means:

                            (A)  the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person (other than Sidney R. Knafel, Michael S. Willner and Kim D. Kelly, or their Affiliates (as that term is used in the Pledge Agreement)) becomes the “beneficial owner” (as that term is defined Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Lender entitled to vote in the election of the Board of Directors of the Lender, measured by voting power rather than number of shares; or

                            (B)  during any consecutive two-year period, the first day on which individuals who constituted the Board of Directors of the Lender as of the beginning of such two-year period (together with any new directors who were nominated for election or elected to such Board of Directors with the approval of a majority of the individuals who were members of such Board of Directors, or whose nomination or election was previously so approved at the beginning of such two-year period) cease to constitute a majority of the Board of Directors of the Lender.

          4.     Forgiveness of Interest.  The Lender may elect to forgive payment of accrued and unpaid interest then due on this Note provided the Borrower is employed by the Lender in good standing.  The Borrower shall be employed in good standing to the extent determined by the management of the Company in its sole and absolute discretion and whose determination shall be final, binding and conclusive upon the parties hereto.  In the event that any interest due on this

- 5 -

Note is forgiven pursuant to this Section 4, Lender shall pay to the Borrower a Gross-Up Payment such that (after taking into account all federal, state, and local income taxes payable by the Borrower as a result of the receipt of the Gross-Up Payment) Borrower will be in the same after-tax position the Borrower would have been in had no income resulted from the forgiveness of interest due on this Note.  For purposes of determining the amount of the Gross-Up Payment, the Borrower shall be deemed to pay taxes at the highest marginal rate of taxation.  Lender shall withhold from the Gross-Up Payment all federal, state, local and other taxes as shall be required by any law or governmental regulation or ruling.  Notwithstanding the forgoing, if the Borrower realizes an actual tax benefit by reason of claiming a deduction for any interest forgiven pursuant to this Section 4, the Borrower shall repay to Lender the amount of any such benefit actually realized.

          5.     Payment and Prepayment.  All payments and prepayments of principal of and interest on this Note shall be made to the Lender in lawful money of the United States of America at the principal offices of the Lender or by transferring to the Lender shares of common stock of the Lender (“Shares”), including Pledged Shares, having a “Fair Market Value” on the day preceding the date of the transfer equal to the cash amount for which such Shares are substituted.  The Borrower may, at the Borrower’s option, prepay this Note in whole or in part at any time or from time to time without penalty or premium.  Any prepayments of any portion of the principal amount of this Note shall be accompanied by payment of all interest accrued but unpaid on the principal amount being prepaid.  “Fair Market Value” shall mean on any date the average of the high and low sales prices of the Shares on such date on the principal national securities exchange on which such shares are listed or admitted to trading, or if such Shares are not so listed or admitted to trading, the arithmetic mean of the per Share closing bid price and per Share closing asked price on such date as quoted on the National Association of Securities Dealers Automated Quotation System or such other market in which such prices are regularly quoted, or, if there have been no published bid or asked quotations with respect to Shares on such date, the Fair Market Value shall be the value established by the Board of Directors of Lender in good faith.

          6.     Events of Default.  (x) Upon the failure of the Borrower to pay (a) the principal on the Note when and as the same becomes due and payable, whether at maturity thereof, upon the occurrence of an event requiring mandatory prepayment under Section 1(a) hereof, or upon the Borrower’s termination of employment requiring payment in full under Section 3(a) hereof, or (b) the interest on the Note when and as the same becomes due and payable, and such failure to pay principal or interest continues for ten (10) days, or (y) if the Borrower shall file a petition in bankruptcy or for an arrangement or any similar relief pursuant to Title 11 of the United States Code or under any similar present or future federal law or the law of any other jurisdiction or shall be adjudicated a bankrupt or insolvent, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of all or any substantial part of the Borrower’s property, or shall make a general assignment for the benefit of creditors, or shall admit in writing the Borrower’s inability to pay the Borrower’s debts generally as they become due, or shall take any action in furtherance of any of the foregoing and such event is not cured within 60 days (each of the events described in clauses (x) and (y) being referred to herein as an “Event of Default”), then, in any such event

- 6 -

described in clause (x), the Lender may declare, by written notice of the Event of Default given to the Borrower, the entire principal amount of this Note to be forthwith due and payable, whereupon the entire principal amount of this Note outstanding and any accrued and unpaid interest hereunder shall become due and payable without presentment, demand, protest, notice of dishonor and all other demands and notices of any kind, all of which are hereby expressly waived, and in any such event described in clause (y), the entire principal amount of this Note outstanding and any accrued and unpaid interest hereunder shall become due and payable without presentment, demand, protest, notice of dishonor and all other demands and notices of any kind, all of which are hereby expressly waived.  If an Event of Default shall occur hereunder, the Borrower shall pay costs of collection, including reasonable attorneys’ fees, incurred by the Lender in the enforcement hereof.

          7.     Waiver.  No delay or failure by the Lender in the exercise of any right or remedy shall constitute a waiver thereof, and no single or partial exercise by the Lender hereof of any right or remedy shall preclude other or future exercise thereof or the exercise of any other right or remedy.

          8.     Loan and Repayment Schedule.  Annexed hereto and made a part hereof is a schedule (the “Loan and Repayment Schedule”) on which shall be shown all repayments of principal and accrued interest made by the Borrower to the Lender (including any interest forgiven by the Lender pursuant to Section 4 hereof) and other information provided for on such Loan and Repayment Schedule.  The Borrower hereby appoints the Lender as its agent to make an appropriate notation on the Loan and Repayment Schedule (or on a continuation of such Loan and Repayment Schedule) evidencing the date and the amount of any principal repayment or interest payment made hereunder or other information provided for on the Loan and Repayment Schedule.

          9.     Miscellaneous. 

                  (a)     The validity, performance and enforcement of this Note shall be governed by the laws of the State of New York, without giving effect to the principles of the conflicts of law thereof.

                  (b)     If the date set for payment of principal or interest hereunder is a Saturday, Sunday or legal holiday, then such payment shall be due on the next succeeding business day.

                  (c)     All notices and other communications hereunder shall be in writing and shall be either personally delivered, or mailed first class mail (postage prepaid) or sent by reputable overnight courier service (charges prepaid) to the Lender at the address set forth below, and to the Borrower at such address as indicated in the Lender’s records, or in either case at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.  Notices will be deemed to have been given hereunder when sent by facsimile (receipt confirmed), delivered personally, five days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.  The Lender’s address is:

- 7 -

Insight Communication Company, Inc.

810 7th Avenue, 41st Floor

New York, New York  10019

Attention:  General Counsel

                  (d)     The headings contained in this Note are inserted for reference only and shall not be deemed to constitute part of this Note or to affect the construction hereof. 

                  (e)     Neither party may assign its rights or obligations under this Note without the prior written consent of the other party.

          IN WITNESS WHEREOF, this Note has been duly executed and delivered by the Borrower as of December 23, 2002.

[Name of Borrower]

- 8 -

LOAN AND REPAYMENT SCHEDULE TO THE SECURED PROMISSORY NOTE

Date Amount
of Principal Paid Amount of Accrued
Interest Paid Notation Made By

NOTE:  Additional pages of this Loan and Repayment Schedule to Note may be attached to the Note by the Lender as may be necessary to record the above information regarding each loan.

- 9 -

EX-10.23

Exhibit 10.23

AGREEMENT

          This Agreement (this “Agreement”) is made and entered into as of December 23, 2002, by and between Kim D. Kelly (the “Employee”), Insight Communications Company, Inc., a Delaware corporation (the “Company”), and each stockholder of the Company set forth on the signature page hereof under the heading “Stockholders” (collectively, the “Stockholders”), each of whom is executing this Agreement for the limited purpose described herein.  Each of the Employee and the Company are sometimes referred to herein as a “Party” or, collectively, as the “Parties.”

RECITALS

          WHEREAS, the Employee is (i) indebted to the Company in the principal amount of $9,583,250.11 (the “Loan”), and such Loan is evidenced by that certain Amended and Restated Non-Recourse Secured Promissory Note Due October 1, 2004, dated as of April 1, 2001 (the “Note”) made by the Employee in favor of the Company and (ii) the record and beneficial owner of 788,420 shares (the “Shares”) of Class B common stock, par value $0.01 per share (“Common Stock”), of the Company, which Shares have been pledged to the Company to secure payment of the Note;

          WHEREAS, the Employee desires to surrender to the Company 746,941 Shares (such amount of Shares being referred to as the “Loan Shares”), which equals the outstanding principal on the Note, based upon the closing price of the Company’s Class A Common Stock, par value $0.01 per share, as reported on The Nasdaq National Market on the date of this Agreement, in settlement of the Employee’s obligations under the Loan;

          WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Committee”) has carefully reviewed and analyzed the transactions contemplated herein, including alternatives to such transactions, and has approved the transactions and presented its findings to the Board of Directors of the Company;

          WHEREAS, the Board of Directors of the Company voted to ratify the Committee’s approval of such transactions, believing it to be in the Company’s best interest to (i) cancel the Loan in full prior to maturity thereof upon surrender to it of the Loan Shares and (ii) issue certain restricted shares of Common Stock and options to purchase Common Stock to the Employee as an incentive to the Employee to surrender the Employee’s Loan Shares and for the Employee’s long-term future performance; and

          WHEREAS, the Company desires and has agreed to (i) cancel the Loan in full prior to maturity upon surrender to it of the Loan Shares and (ii) issue certain restricted shares of Common Stock and options to purchase Common Stock to the Employee as an incentive to the Employee to surrender the Employee’s Loan Shares and for the Employee’s long-term future performance, all upon the terms and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and the representations, warranties, covenants and agreements contained herein and

for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

          1.          Surrender of Shares and Cancellation of Note.  Subject to the terms and conditions of this Agreement, the Employee agrees to surrender to the Company the Loan Shares and the Company agrees to cancel the Loan in full upon surrender to it of the Loan Shares. Such transfer and cancellation are collectively referred to herein as the “Loan Repayment.”

          2.          Issuance of Restricted Shares and Options. 

A.   Subject to the terms and conditions of this Agreement, the Company agrees to issue to the Employee (i) an aggregate of 450,000 shares of its Class B Common Stock (the “Restricted Shares”), which Restricted Shares shall be issued pursuant to, and have the terms and conditions (including the vesting schedule) set forth in, a Restricted Stock Agreement in the form attached hereto as Exhibit A (the “Restricted Stock Agreement”) and (ii) options to purchase an aggregate of 900,000 shares of Common Stock (the “Stock Options”), which Stock Options shall be issued pursuant to, and have the terms and conditions (including the class of common stock, the exercise price and the vesting schedule) set forth in, a Stock Option Agreement or Agreements in the form or forms attached hereto as Exhibit B (the “Stock Option Agreement(s)” and, collectively with this Agreement and the Restricted Stock Agreement, the “Transaction Documents”). The issuance of the Restricted Shares and the Stock Options to the Employee are collectively referred to herein as the “Issuance” and collectively with the Loan Repayment, the “Transactions.”

B.   Notwithstanding anything herein to the contrary, the Issuance shall be subject to and contingent upon approval by the Company’s stockholders at the Company’s 2003 annual meeting of stockholders (the “Annual Meeting”) of such amendments to the Company’s 1999 Stock Option Plan as may be necessary to effect the Issuance thereunder (the “Amendments”). The Company shall include in its proxy statement relating to the Annual Meeting a proposal seeking approval of the Amendments (the “Proposal”). Further, the Company’s Board of Directors shall recommend that stockholders approve the Proposal, and the Company shall use its best efforts to obtain such approval.

          3.          Deliveries.  Concurrently with the execution and delivery of this Agreement, (i) the Employee shall deliver to the Company a stock certificate or certificates representing all of the Loan Shares, either endorsed to the Company’s order or accompanied by a stock power endorsed to the Company’s order, or other appropriate documentation if the Loan Shares are uncertificated (the “Deliveries”), (ii) the Company shall deliver to the Employee the original of the Note, marked “cancelled” and (iii) the Company and the Employee shall execute and deliver the Restricted Stock Agreement and the Stock Option Agreement(s).

          4.          Satisfaction and Discharge of Loan.  The Company agrees that effective upon the Deliveries, all obligations and other liabilities (including, without limitation, those in respect of principal, interest and any applicable premiums or penalties) of the Employee outstanding under the Note shall be satisfied in full and irrevocably discharged. Concurrently with the completion of the Deliveries, the Pledge Agreement dated as of October 1, 1999 made by the Employee to the Company is hereby terminated and shall be of no further force and effect.

- 2 -

          5.          Representations and Warranties of the Employee. The Employee represents and warrants to the Company as follows:

A.    Obligation of the Employee.  The Transaction Documents constitute the legal, valid and binding obligation of the Employee, enforceable in accordance with their respective terms.

B.    Non-Contravention.  Neither the execution and delivery of the Transaction Documents, nor the consummation of the Transactions, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency or court to which the Employee is subject or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Employee is a party or by which the Employee is bound or to which the Employee’s assets are subject.

C.    Filings.  Other than compliance with Sections 13(d), 13(g) and 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Employee is not required to give any notice to, make any filing with, or obtain any authorization, consent or approval of any government or governmental agency or third party in order to consummate the Transactions.

D.    The Loan Shares.  The Employee is the record and beneficial owner of the Loan Shares.  The Employee owns the Loan Shares free and clear of all claims, charges, equities, liens, security interests, pledges, mortgages or encumbrances (other than (i) as will be discharged on or prior to the date hereof and (ii) any restrictions under the Securities Act of 1933, as amended (the “Securities Act”) or state securities laws).

E.    Investment Experience.  The Employee is an “accredited investor” as defined in Rule 501(a) of Regulation D, promulgated under the Securities Act or, if not an “accredited investor,” either alone or with the Employee’s representatives has such knowledge and experience in financial and business matters that the Employee is capable of evaluating the merits and risks of the Transactions.  The Employee is aware of the Company’s business affairs and financial condition and has had access to and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to enter into and consummate the Transactions.  The Employee acknowledges that the Employee has been afforded the opportunity to ask questions and receive answers from the Company regarding the (i) Company, (ii) Transactions, (iii) Transaction Documents, (iv) Restricted Shares, (v) Stock Options and (vi) Information Statement dated December 18, 2003 with respect to the Transactions, which includes information and an analysis with respect to the Company and the Issuance (the “Information Statement”), and to obtain any additional information reasonably necessary to verify the accuracy of such information, and has received satisfactory answers to any such questions. The Employee further acknowledges that the Employee has been afforded the opportunity to consult the Employee’s own legal, tax and financial advisors regarding the (i) Company, (ii) Transactions, (iii) Transaction Documents, (iv) Restricted Shares, (v) Stock Options and (vi) Information Statement, and that the Employee possesses such business and financial

- 3 -

experience to protect the Employee’s own interests in connection with the consummation of the Transactions, and further acknowledges that the Employee has not received and is not relying upon any legal, tax or financial advice from the Company or any of its employees, officers or representatives.

F.   Investment Intent.  The Employee is acquiring the Restricted Shares and the Stock Options for the Employee’s own account for investment purposes only and not with a present view to, or for resale in connection with, any distribution thereof, or any direct or indirect participation in any such distribution, in whole or in part, within the meaning of the Securities Act.  No arrangement exists between the Employee and the Company and any other person regarding the resale or distribution of the Restricted Shares or the Stock Options.  The Employee understands that the right to transfer the Restricted Shares and Stock Options is not permitted absent registration under the Securities Act or an exemption therefrom and that the Employee’s acquisition of the Restricted Shares and the Stock Options has not been and will not be required to be registered under the Securities Act or registered or qualified under any state securities law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of the Employee’s investment intent as expressed herein.

G.   Tax Return Election.  The Employee acknowledges and understands that the information and analysis with respect to the Issuance provided to the Employee by the Company in the Information Statement assumes that the Employee will not make an election on the Employee’s tax returns relating to the Issuance under Section 83(b) of the Internal Revenue Code of 1986, as amended (a “Section 83(b) Election”). The Employee further acknowledges and understands that if the Employee makes a Section 83(b) Election, the Employee’s tax consequences in respect of the Issuance may be different from that set forth in the Information Statement.

          6.          Representations and Warranties of the Company.  The Company represents and warrants to the Employee as follows:

                       (a)     Organization.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

                       (b)     Authorization.  The Company represents and warrants to the Employee that (i) it has all requisite corporate power, capacity and authority and has taken all requisite corporate action to authorize, execute and deliver each of the Transaction Documents, to consummate the Transactions and to carry out and perform all of its obligations under the Transaction Documents and (ii) the Transaction Documents each constitutes the legal, valid and binding obligation of the Company. Except as otherwise described herein, the Company is not required to give any notice to, make any filing with, or obtain any authorization, consent or approval of any government or governmental agency or third party in order to consummate the Transactions.

                       (c)     Non-Contravention.  Neither the execution and delivery of the Transaction Documents, nor the consummation of the Transactions, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency or court to which the Company is subject, or violate any provision of its certificate of incorporation or bylaws or (ii) conflict with, result in a breach of,

- 4 - -

constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Company is a party or by which it is bound or to which its assets are subject.

          7.          Covenants.

                       (a)     The Employee hereby covenants and agrees that (i) the Employee will use the Employee’s best efforts to take all action and to do all things necessary, proper or advisable in order to consummate and make effective the Transactions and (ii) in case at any time after the date hereof any further action is necessary to carry out the purposes of the Transaction Documents, the Employee will take such further action (including, without limitation, the execution and delivery of such further instruments and documents) as the Company reasonably may request, all at the sole cost and expense of the Company.

                       (b)     The Company hereby covenants and agrees that (i) it will use its best efforts to take all action and to do all things necessary, proper or advisable in order to consummate and make effective the Transactions and (ii) in case at any time after the date hereof any further action is necessary to carry out the purposes of the Transaction Documents, it will take such further action (including, without limitation, the execution and delivery of such further instruments and documents) as the Employee reasonably may request, all at the sole cost and expense of the Company.

          8.          Voting Agreements.  Each Stockholder agrees to vote, or cause to be voted, all shares of common stock of the Company with respect to which such Stockholder has voting power in favor of the Proposal at the Annual Meeting.

          9.          Miscellaneous.

                       (a)     Entire Agreement.  The Transaction Documents constitute the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral (including the Information Statement), to the extent they related in any way to the subject matter hereof.

                       (b)     Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of (i) the Parties and their respective successors, assigns, personal representatives, heirs, executors and administrators and (ii) the Stockholders and their respective successors, personal representatives, heirs, executors and administrators. Notwithstanding the foregoing, neither of the Parties may assign either this Agreement or any of their respective rights, interests, or obligations hereunder without the prior written approval of the other Party.

                       (c)     Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

                       (d)     Headings.  The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

- 5 -

                       (e)     Governing Law.  This Agreement shall be governed by and construed in accordance with the domestic laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

                       (f)     Amendments and Waivers.  No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Company and the Employee and, with respect to any amendment of Section 8 or 9(b) hereof, each of the Stockholders.  No waiver by either Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

                       (g)     Survival.  The representations, warranties, covenants and agreements made in this Agreement shall survive the execution and delivery hereof and any investigation made by the Company or the Employee.

                       (h)     Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE TO FOLLOW]

- 6 -

          IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

	KIM D. KELLY
INSIGHT COMMUNICATIONS COMPANY, INC.
By:
Name:
Title:
STOCKHOLDERS (Solely With Respect to Sections 8 and 9(b)):
	Sidney R. Knafel
	Michael S. Willner
	Andrew G. Knafel, Joshua Rubenstein and William L. Scherlis
	Trustees U/A 11/6/83 F/B/O Douglas R. Knafel
	Trustees U/A 9/13/78 F/B/O Andrew G. Knafel
	Trustees U/A 9/13/78 F/B/O Douglas R. Knafel
	Trustees U/A 7/16/76 F/B/O Andrew G. & Douglas Knafel

- 7 - -

Exhibit A

Restricted Stock Agreement

INSIGHT COMMUNICATIONS COMPANY, INC.
1999 STOCK OPTION PLAN

RESTRICTED STOCK AGREEMENT

          AGREEMENT, dated as of December 23, 2002 (“Grant Date”), between Insight Communications Company, Inc., a Delaware corporation (the “Company”), and Kim D. Kelly (the “Grantee”).

W I T N E S S E T H:

          WHEREAS, on June 24, 1999, the Board of Directors of the Company (the “Board”) adopted the Insight Communications Company, Inc. 1999 Stock Option Plan (the “Plan”), which Plan authorizes the grant of options to purchase shares of common stock, $.01 par value (“Common Stock”), of the Company to directors, officers and employees of the Company and to other individuals; and

          WHEREAS, the Board has approved an amendment and restatement of the Plan, which, among other things, (i) increases the number of shares of Common Stock authorized for issuance under the Plan and (ii) authorizes the grant of restricted stock, and the Board has proposed to submit the amended and restated Plan for shareholder approval at the Company’s next annual meeting of its shareholders (the term Plan as used herein shall refer to such amendment and restatement of the Plan); and

          WHEREAS, the Company, upon the authorization and direction of the Board, and the Grantee and certain shareholders of the Company have entered into an Agreement dated as of December 23, 2002, pursuant to which the Company has, among other things, agreed to grant the restricted stock documented herein.

          NOW, THEREFORE, the parties hereto hereby agree as follows:

10.  Grant of Restricted Stock.  Subject to the terms and conditions of the Plan and as set forth herein, the Company hereby grants to the Grantee, as of the date hereof, 450,000 shares of Class B Common Stock of the Company (“Restricted Stock”).

11.  Transfer Restrictions and Stock Power.  The Restricted Stock may not be sold, assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee, and any purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any subsidiary of the Company.  The Restricted Stock shall be subject to a risk of forfeiture upon the Grantee’s Termination of Employment (as defined in Section 3 below) until the end of the Vesting Date (as defined in Section 3 below).

- 8 -

          Certificates representing the Restricted Stock will be held by the Company for the Grantee until the Vesting Date.  Upon issuance of the shares of Restricted Stock in the Grantee’s name, the Grantee will be the holder of record of the Restricted Stock and will have all rights of a shareholder with respect to such shares (including the right to vote such shares at any meeting of shareholders of the Company and the right to receive all dividends paid with respect to such shares), subject only to the terms and conditions imposed by this Agreement.  The Grantee agrees to sign and deliver to the Company a stock power relating to the Restricted Stock.

          If any shares of Restricted Stock are forfeited hereunder at any time prior to the Vesting Date of such shares of Restricted Stock, appropriate officers of the Company shall direct the transfer agent and registrar of the Company’s Common Stock to make appropriate entries upon their records showing cancellation of the certificate or certificates for such Restricted Stock. 

          Upon vesting of any shares of Restricted Stock hereunder in accordance with Section 3 or Section 4 below, and the Grantee’s delivery to the Company of the amount necessary to satisfy the Company’s federal, state and local employment and income tax withholding obligation as provided in Section 9, the Company shall cancel the stock power with respect to such vested shares of Restricted Stock and the Company shall deliver such shares to the Grantee.  Thereafter, such shares shall cease to be Restricted Stock and shall be nonforfeitable and freely transferable, except as provided in Section 7.

12.  Vesting.  The number of shares of Restricted Stock set forth below shall vest as of the Vesting Dates specified in the Table below, provided that the Grantee has not had a Termination of Employment (as defined below) prior to such Vesting Date.

Vesting Date	Number of Shares of Restricted Stock Vesting
11/15/03		90,000
11/15/04		90,000
11/15/05		90,000
11/15/06		90,000
11/15/07		90,000

For purposes of this Agreement, the Grantee will have a “Termination of Employment” on the date the Grantee ceases, for any or no reason, to provide services to the Company or any of its subsidiaries in the capacity of an employee.  Except as provided in Section 4, if the Grantee’s has a Termination of Employment prior to the Vesting Date, the Grantee will immediately forfeit all remaining shares of Restricted Stock, and all of the Grantee’s rights to and interest in the Restricted Stock shall terminate upon forfeiture without payment of any consideration. 

- 9 -

13.  Acceleration of Vesting.  Notwithstanding Section 3, upon (i) the Grantee’s Termination of Employment due to death or disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”)), or (ii) a Change of Control of the Company (as defined below) if the Grantee has not had a Termination of Employment prior to such Change of Control, all shares of Restricted Stock granted hereunder shall immediately vest.

          A “Change of Control” of the Company shall mean the occurrence of any of the following events:

          (1)     the distribution of proceeds to the shareholders of the Company in connection with the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Company to any “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”);

          (2)     the liquidation or dissolution of the Company;

          (3)     the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, other than any such transaction where the voting securities of the Company outstanding immediately prior to such transaction are converted into or exchanged for voting securities of the surviving or transferee Person constituting 50% or more of the combined voting power of the outstanding shares of such voting securities of such surviving or transferee Person (immediately after giving effect to such issuance);

          (4)     the consummation of any transaction the result of which is that any Person (other than Sidney R. Knafel, Michael S. Willner and Kim D. Kelly, or their “affiliates” (as that term is defined in Rule 12b-2 under the Exchange Act) becomes the “beneficial owner” (as that term is defined Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote in the election of the Board, measured by voting power rather than number of shares; or

          (5)     during any consecutive two-year period, the first day on which individuals who constituted the Board as of the beginning of such two-year period (together with any new directors who were nominated for election or elected to such Board with the approval of a majority of the individuals who were members of such Board, or whose nomination or election was previously so approved at the beginning of such two-year period) cease to constitute a majority of the Board.

14.  No Special Employment Rights.  Neither the granting of the Restricted Stock nor the vesting of such Restricted Stock shall be construed to confer upon the Grantee any right with respect to the continuation of the Grantee’s employment by the Company (or any subsidiary of the Company) or interfere in any way with the right of the Company (or any subsidiary of the

- 10 -

Company), subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of the Grantee from the rate in existence as of the date hereof.

15.  Restricted Stock Grant Subject to Shareholder Approval of Plan Amendment.
Notwithstanding anything herein to the contrary, the grant of the Restricted Stock documented herein shall be subject to and contingent upon ratification or approval by the Company’s shareholders at the Company’s next annual meeting of shareholders (the “Annual Shareholders’ Meeting”) of the amendment and restatement of the Plan, among other things, to (i) increase the number of shares of Common Stock authorized for issuance under the Plan and (ii) provide for the grant of restricted stock.  The Company shall use its best efforts to include in its next proxy statement delivered to shareholders relating to the Annual Shareholders’ Meeting a proposal or proposals approving or ratifying such amendment and restatement of the Plan.

16.  Investment Intent; Transfer Restrictions.  The Grantee is acquiring the Restricted Stock for the Grantee’s own account for investment purposes only and not with a present view to, or for resale in connection with, any distribution thereof, or any direct or indirect participation in any such distribution, in whole or in part, within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).  No arrangement exists between the Grantee and the Company and any other person regarding the resale or distribution of the Restricted Stock.  The Grantee understands that the right to transfer shares of Restricted Stock or unrestricted Common Stock obtained upon vesting of the Restricted Stock is not permitted absent registration under the Securities Act or an exemption therefrom.

          The Company may, without liability for its good faith actions, place legend restrictions upon the Restricted Stock or unrestricted Common Stock obtained upon vesting of the Restricted Stock and issue “stop transfer” instructions requiring compliance with applicable securities laws and the terms of the Restricted Stock.

17.  Amendment.  Subject to the terms and conditions of the Plan, the Board or the committee appointed by the Board to administer this Plan (the “Committee”), whichever shall then have authority to administer the Plan, may amend this Agreement with the consent of the Grantee when and subject to such conditions as are deemed to be in the best interests of the Company and in accordance with the purposes of the Plan.

18.  Tax Withholding.  Whenever any Restricted Stock vests under the terms of this Agreement, the Grantee must remit or, in appropriate cases, agree to remit when due, the minimum amount necessary to satisfy all of the Company’s federal, state and local withholding (including FICA) tax requirements relating to the vesting of such shares of Restricted Stock.  The Committee may require you to satisfy these minimum withholding tax obligations by any (or a combination) of the following means: (i) a cash payment; (ii) withholding from compensation otherwise payable to the Grantee; (iii) authorizing the Company to withhold from the shares of Common Stock deliverable to the Grantee as a result of the vesting of Restricted Stock, a number of shares having a fair market value, as of the date the withholding tax obligation arises, less than or equal to the amount of the withholding obligation; or (iv) delivering to the Company unencumbered “Mature Share” (as defined below) of Common Stock having a fair market value, as of the date the withholding tax obligation arises, less than or equal to the amount of the withholding obligation.  The Committee may approve delivery to the Company of Mature Shares up to the

- 11 -

total amount of the Grantee’s tax liability with respect to the exercise of the Option. The Company will not deliver to the Grantee the shares of Common Stock otherwise deliverable to the Grantee as a result of the vesting of Restricted Stock unless the Grantee remits (or in appropriate cases agree to remit) all withholding tax requirements relating to the vesting of Restricted Stock.

          The term “Mature Shares” as used herein shall mean shares of Common Stock for which the holder has good title, free and clear of all liens and encumbrances, and which such holder either (i) has held for at least six months or (ii) has purchased on the open market.

19.  Notices.  Any communication or notice required or permitted to be given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Grantee, to the address as appearing on the records of the Company. Such communication or notice shall be deemed given if and when (a) properly addressed and posted by registered or certified mail, postage prepaid, or (b) delivered by hand.

20.  Incorporation of Plan by Reference.  The Restricted Stock is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan.  The Board or the Committee, whichever shall then have authority to administer the Plan, shall interpret and construe the Plan and this Agreement, and their interpretations and determinations shall be conclusive and binding upon the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder.

21.  Governing Law.  The validity, construction and interpretation of this Agreement shall be governed by and determined in accordance with the laws of the State of New York.

          IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date above written.

INSIGHT COMMUNICATIONS COMPANY, INC.
By:
GRANTEE:
	Kim D. Kelly

- 12 -

Exhibit B

Stock Option Agreement(s)

INSIGHT COMMUNICATIONS COMPANY, INC.
1999 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

          AGREEMENT, dated as of December 23, 2002 (“Grant Date”), between Insight Communications Company, Inc., a Delaware corporation (the “Company”), and Kim D. Kelly (the “Optionee”).

W I T N E S S E T H:

          WHEREAS, on June 24, 1999, the Board of Directors of the Company (the “Board”) adopted the Insight Communications Company, Inc. 1999 Stock Option Plan (the “Plan”), which Plan authorizes the grant of options to purchase shares of common stock, $.01 par value (“Common Stock”), of the Company to directors, officers and employees of the Company and to other individuals; and

          WHEREAS, the Board has approved an amendment and restatement of the Plan, which, among other things, increases the number of shares of Common Stock authorized for issuance under the Plan, and the Board has proposed to submit the amended and restated Plan for shareholder approval at the Company’s next annual meeting of its shareholders (the term Plan as used herein shall refer to such amendment and restatement of the Plan); and

          WHEREAS, the Company, upon the authorization and direction of the Board, and the Optionee and certain shareholders of the Company have entered into an Agreement dated as of December 23, 2002, pursuant to which the Company has, among other things, agreed to grant the option documented herein.

          NOW, THEREFORE, the parties hereto hereby agree as follows:

22.  Grant of Option.  Subject to the terms and conditions of the Plan and as set forth herein, the Company hereby grants to the Optionee, as of the date hereof, an option (the “Option”) to purchase from the Company all or any part of an aggregate number of 303,059 shares of Class A Common Stock (the “Class A Optioned Shares”) and 296,941 shares of Class B Common Stock (the “Class B Optioned Shares”).  The Class A Optioned Shares and Class B Optioned Shares shall be referred to collectively as the “Optioned Shares.”

23.  Non-qualified Stock Option.  The Option is intended by the parties to be a non-qualified stock option and shall not be treated as an “incentive stock option” (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)).

- 13 -

24.  Installment Exercise.  Subject to such further limitations as are provided in the Plan and as set forth herein, the Option shall become exercisable on the dates set forth below and the Optionee shall have the right hereunder to purchase from the Company at a per share price (“Option Price”) equal to the fair market value of a share of Class A Common Stock as of the Grant Date, as set forth below, the indicated number of Optioned Shares upon exercise of the Option, on and after such dates, in cumulative fashion:

Exercise Date	Cumulative Number of Class A Optioned Shares		Cumulative Number of Class B Optioned Shares		Option Price
1st Anniversary of the Grant Date		0		120,000	$	12.83
2nd Anniversary of the Grant Date		0		240,000	$	12.83
3rd Anniversary of the Grant Date		63,059		296,941	$	12.83
4th Anniversary of the Grant Date		183,059		296,941	$	12.83
5th Anniversary of the Grant Date		303,059		296,941	$	12.83

25.  Acceleration of Vesting on Change of Control of the Company.  Immediately upon a Change of Control of the Company (as defined below), the Option shall become exercisable with respect to the full number of Optioned Shares not previously exercised, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so on the date of such Change of Control of the Company. 

          A “Change of Control” of the Company shall mean the occurrence of any of the following events:

          (1)     the distribution of proceeds to the shareholders of the Company in connection with the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Company to any “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”);

          (2)     the liquidation or dissolution of the Company;

          (3)     the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, other than any such transaction where the voting securities of the Company outstanding immediately prior to such transaction are converted into or exchanged for voting securities of the surviving or transferee Person constituting 50% or more of the combined voting power of the outstanding shares of such voting securities of such surviving or transferee Person (immediately after giving effect to such issuance);

          (4)     the consummation of any transaction the result of which is that any Person (other than Sidney R. Knafel, Michael S. Willner and Kim D. Kelly, or their “affiliates” (as that term is defined in Rule 12b-2 under the Exchange Act) becomes the “beneficial owner” (as that term is defined Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular Person, such Person

- 14 -

shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote in the election of the Board, measured by voting power rather than number of shares; or

          (5)     during any consecutive two-year period, the first day on which individuals who constituted the Board as of the beginning of such two-year period (together with any new directors who were nominated for election or elected to such Board with the approval of a majority of the individuals who were members of such Board, or whose nomination or election was previously so approved at the beginning of such two-year period) cease to constitute a majority of the Board.

26.  Minimum Number of Optioned Shares Subject to Option Exercise.  The Option may not be exercised with respect to less than 100 Optioned Shares (or the Optioned Shares then subject to purchase under the Option, if less than 100 shares) or for any fractional shares.

27.  Termination of Option. 

          (a)     The Option, to the extent not previously exercised, shall terminate and become null and void upon the expiration of 10 years after the date hereof (the “Option Term”).

A.  Subject to the provisions of Section 7 hereof, and except as otherwise provided in this Section 6, upon the Optionee’s ceasing for any reason to be employed by the Company or any of its subsidiaries (such occurrence being a “termination of the Optionee’s employment”), the Option, to the extent not previously exercised, shall terminate and become null and void three months after such termination of the Optionee’s employment, or upon the expiration of the Option Term, whichever occurs first.

B.  Upon a termination of the Optionee’s employment for “cause” (as determined by the Board in its sole discretion), the Option, to the extent not previously exercised, shall terminate and become null and void immediately upon such termination of the Optionee’s employment.

C.  Upon a termination of the Optionee’s employment by reason of permanent disability (within the meaning of Section 22(e)(3) of the Code) or by reason of the death of the Optionee, the Option, to the extent not previously exercised, shall terminate and become null and void twelve months after such termination of the Optionee’s employment, or upon the expiration of the Option Term, whichever occurs first.

28.  Exercisability. 

          (a)     Except as otherwise provided in Section 4 or in this Section 7, upon a termination of the Optionee’s employment, the Option shall be exercisable only to the extent that the Option (i) was exercisable immediately prior to such termination of the Optionee’s employment and (ii) has not terminated pursuant to Section 6.

- 15 -

          (b)     Upon a termination of the Optionee’s employment by reason of permanent disability or by reason of the death of the Optionee, the Option shall immediately upon the date of such termination of the Optionee’s employment become exercisable with respect to the full number of Optioned Shares not previously exercised, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so on such date. To the extent exercisable, the Option may be exercised by a legal representative on behalf of the Optionee in the event of such permanent disability, or, in the case of the death of the Optionee, by the estate of the Optionee or by any person or persons who acquired the right to exercise the Option by bequest or inheritance or by reason of the death of the Optionee.

29.  Manner of Exercise. 

          (a)     The Option may be exercised in full at one time or in part from time to time for the number of Optioned Shares then exercisable by giving written notice, signed by the person exercising the Option, to the Company, stating the number of Optioned Shares with respect to which the Option is being exercised and the date of exercise thereof, which date shall be at least five days after the giving of such notice.

          (c)     Full payment by the Optionee of the Option Price for each Optioned Share purchased shall be made on or before the exercise date specified in the notice of exercise by delivery of (i) cash or a check payable to the order of the Company in an amount equal to such Option Price, (ii) shares of Common Stock owned by the Optionee having a fair market value equal in amount to such Option Price, or (iii) any combination of the preceding clauses (i) and (ii).

A.  The Company shall be under no obligation to issue any Optioned Shares unless the person exercising the Option, in whole or in part, shall give a written representation and undertaking to the Company which is satisfactory in form and substance to counsel for the Company and upon which, in the opinion of such counsel, the Company may reasonably rely, that the Optionee is acquiring such Optioned Shares for the Optionee’s own account as an investment and not with a view to, or for sale in connection with, the distribution of any such Optioned Shares, and that the Optionee will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the Securities Act of 1933, or any other applicable law.

B.  Upon exercise of the Option in the manner prescribed by this Section 8, delivery of a certificate for the Optioned Shares then being purchased shall be made at the principal office of the Company to the person exercising the Option within a reasonable time after the date of exercise specified in the notice of exercise.

30.  Non-Transferability of Option.  The Option shall not be assignable or transferable by the Optionee other than by will or the laws of descent, and shall be exercisable during the lifetime of the Optionee only by the Optionee. The Option shall terminate and become null and void immediately upon the bankruptcy of the Optionee, or upon any attempted assignment or transfer except as herein provided, including without limitation, any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition, attachment, trustee process or similar process, whether legal or equitable, upon the Option.

- 16 -

31.  No Special Employment Rights.  Neither the granting of the Option nor its exercise shall be construed to confer upon the Optionee any right with respect to the continuation of the Optionee’s employment by the Company (or any subsidiary of the Company) or interfere in any way with the right of the Company (or any subsidiary of the Company), subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of the Optionee from the rate in existence as of the date hereof.

32.  Option Grant Subject to Shareholder Approval of Plan Amendment.  Notwithstanding anything herein to the contrary, the grant of the Option documented herein shall be subject to and contingent upon ratification or approval by the Company’s shareholders at the Company’s next annual meeting of shareholders (the “Annual Meeting”) of an amendment and restatement of the Plan, among other things, to increase the number of shares of Common Stock authorized for issuance under the Plan.  The Company shall use its best efforts to include in its next proxy statement delivered to shareholders relating to the Annual Meeting a proposal or proposals approving or ratifying such amendment to the Plan.

33.  No Rights of Stockholder.  The Optionee shall not be deemed for any purpose to be a shareholder of the Company with respect to the Option except to the extent that the Option shall have been exercised with respect thereto and, in addition, a stock certificate shall have been issued theretofore and delivered to the Optionee.

34.  Amendment.  Subject to the terms and conditions of the Plan, the Board or the committee appointed by the Board to administer this Plan (the “Committee”), whichever shall then have authority to administer the Plan, may amend this Agreement with the consent of the Optionee when and subject to such conditions as are deemed to be in the best interests of the Company and in accordance with the purposes of the Plan.

35.  Tax Withholding.  Whenever any Optioned Shares are purchased under the terms of this Agreement, the Optionee must remit or, in appropriate cases, agree to remit when due, the minimum amount necessary to satisfy all of the Company’s federal, state and local withholding (including FICA) tax requirements relating to the purchase of such Optioned Shares.  The Committee may require you to satisfy these minimum withholding tax obligations by any (or a combination) of the following means: (i) a cash payment; (ii) withholding from compensation otherwise payable to the Optionee; (iii) authorizing the Company to withhold from the Optioned Shares deliverable to the Optionee as a result of the exercise of the Option, a number of shares having a fair market value, as of the date the withholding tax obligation arises, less than or equal to the amount of the withholding obligation; or (iv) delivering to the Company unencumbered “Mature Shares” (as defined below) of Common Stock having a fair market value, as of the date the withholding tax obligation arises, less than or equal to the amount of the withholding obligation.  The Committee may approve delivery to the Company of Mature Shares up to the total amount of the Optionee’s tax liability with respect to the exercise of the Option. The Company will not deliver to the Optionee the Optioned Shares purchased pursuant to the exercise of the Option unless the Optionee remits (or in appropriate cases agree to remit) all withholding tax requirements relating to the purchase of such Optioned Shares as described above.

- 17 -

          The term “Mature Shares” as used herein shall mean shares of Common Stock for which the holder has good title, free and clear of all liens and encumbrances, and which such holder either (i) has held for at least six months or (ii) has purchased on the open market.

36.  Notices.  Any communication or notice required or permitted to be given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Optionee, to the address as appearing on the records of the Company. Such communication or notice shall be deemed given if and when (a) properly addressed and posted by registered or certified mail, postage prepaid, or (b) delivered by hand.

37.  Incorporation of Plan by Reference.  The Option is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan.  The Board or the Committee, whichever shall then have authority to administer the Plan, shall interpret and construe the Plan and this Agreement, and their interpretations and determinations shall be conclusive and binding upon the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder.

38.  Governing Law.  The validity, construction and interpretation of this Agreement shall be governed by and determined in accordance with the laws of the State of New York.

          IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date above written.

INSIGHT COMMUNICATIONS COMPANY, INC.
By:
OPTIONEE:
	Kim D. Kelly

- 18 -

INSIGHT COMMUNICATIONS COMPANY, INC.
1999 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

          AGREEMENT, dated as of December 23, 2002 (“Grant Date”), between Insight Communications Company, Inc., a Delaware corporation (the “Company”), and Kim D. Kelly (the “Optionee”).

W I T N E S S E T H:

          WHEREAS, on June 24, 1999, the Board of Directors of the Company (the “Board”) adopted the Insight Communications Company, Inc. 1999 Stock Option Plan (the “Plan”), which Plan authorizes the grant of options to purchase shares of common stock, $.01 par value (“Common Stock”), of the Company to directors, officers and employees of the Company and to other individuals; and

          WHEREAS, the Board has approved an amendment and restatement of the Plan, which, among other things, increases the number of shares of Common Stock authorized for issuance under the Plan, and the Board has proposed to submit the amended and restated Plan for shareholder approval at the Company’s next annual meeting of its shareholders (the term Plan as used herein shall refer to such amendment and restatement of the Plan); and

          WHEREAS, the Company, upon the authorization and direction of the Board, and the Optionee and certain shareholders of the Company have entered into an Agreement dated as of December 23, 2002, pursuant to which the Company has, among other things, agreed to grant the option documented herein.

          NOW, THEREFORE, the parties hereto hereby agree as follows:

39.  Grant of Option.  Subject to the terms and conditions of the Plan and as set forth herein, the Company hereby grants to the Optionee, as of the date hereof, an option (the “Option”) to purchase from the Company all or any part of an aggregate number of 300,000 shares of Class A Common Stock (the “Optioned Shares”).

40.  Non-qualified Stock Option.  The Option is intended by the parties to be a non-qualified stock option and shall not be treated as an “incentive stock option” (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)).

41.  Installment Exercise.  Subject to such further limitations as are provided in the Plan and as set forth herein, the Option shall become exercisable on the dates set forth below and the Optionee shall have the right hereunder to purchase from the Company at a per share price (“Option Price”) equal to the fair market value of a share of Class A Common Stock as of the Grant Date, as set forth below, the indicated number of Optioned Shares upon exercise of the

- 19 -

Option, on and after such dates, in cumulative fashion:

Exercise Date	Cumulative Number of Optioned Shares		Option Price
9th Anniversary of the Grant Date		300,000	$	12.83

42.  Acceleration of Vesting on Change of Control of the Company.  Immediately upon a Change of Control of the Company (as defined below), the Option shall become exercisable with respect to the full number of Optioned Shares not previously exercised, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so on the date of such Change of Control of the Company. 

          A “Change of Control” of the Company shall mean the occurrence of any of the following events:

          (1)     the distribution of proceeds to the shareholders of the Company in connection with the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Company to any “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”), provided that such proceeds equal or exceed $24.50 per share of Common Stock;

          (2)     the liquidation or dissolution of the Company and receipt by the shareholders of the Company of distributions upon such liquidation or dissolution in an amount equal to or exceeding $24.50 per share of Common Stock;

          (3)     the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which the shareholders of the Company receive cash, securities or other property having an aggregate fair market value equal to or exceeding $24.50 per share of Common Stock, other than any such transaction where the voting securities of the Company outstanding immediately prior to such transaction are converted into or exchanged for voting securities of the surviving or transferee Person constituting 50% or more of the combined voting power of the outstanding shares of such voting securities of such surviving or transferee Person (immediately after giving effect to such issuance);

          (4)     the consummation of any transaction the result of which is that (i) any Person (other than Sidney R. Knafel, Michael S. Willner and Kim D. Kelly, or their “affiliates” (as that term is defined in Rule 12b-2 under the Exchange Act) becomes the “beneficial owner” (as that term is defined Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of 50% or more of the combined voting

- 20 -

power of the then outstanding voting securities of the Company entitled to vote in the election of the Board, measured by voting power rather than number of shares, and (ii) the shareholders of the Company receive cash, securities or other property having an aggregate fair market value equal to or exceeding $24.50 per share of Common Stock; or

          (5)     during any consecutive two-year period, the first day on which the individuals who constituted the Board as of the beginning of such two-year period (together with any new directors who were nominated for election or elected to such Board with the approval of a majority of the individuals who were members of such Board, or whose nomination or election was previously so approved at the beginning of such two-year period) cease to constitute a majority of the Board; provided, however that the fair market value per share of Common Stock on such date equals or exceeds $24.50.

43.  Minimum Number of Optioned Shares Subject to Option Exercise.  The Option may not be exercised with respect to less than 100 Optioned Shares (or the Optioned Shares then subject to purchase under the Option, if less than 100 shares) or for any fractional shares.

44.  Termination of Option. 

          (a)     The Option, to the extent not previously exercised, shall terminate and become null and void upon the expiration of 10 years after the date hereof (the “Option Term”).

A.   Subject to the provisions of Section 7 hereof, and except as otherwise provided in this Section 6, upon the Optionee’s ceasing for any reason to be employed by the Company or any of its subsidiaries (such occurrence being a “termination of the Optionee’s employment”), the Option, to the extent not previously exercised, shall terminate and become null and void three months after such termination of the Optionee’s employment, or upon the expiration of the Option Term, whichever occurs first.

B.   Upon a termination of the Optionee’s employment for “cause” (as determined by the Board in its sole discretion), the Option, to the extent not previously exercised, shall terminate and become null and void immediately upon such termination of the Optionee’s employment.

C.   Upon a termination of the Optionee’s employment by reason of permanent disability (within the meaning of Section 22(e)(3) of the Code) or by reason of the death of the Optionee, the Option, to the extent not previously exercised, shall terminate and become null and void twelve months after such termination of the Optionee’s employment, or upon the expiration of the Option Term, whichever occurs first.

45.  Exercisability. 

          (a)     Except as otherwise provided in Section 4 or in this Section 7, upon a termination of the Optionee’s employment, the Option shall be exercisable only to the extent that the Option (i) was exercisable immediately prior to such termination of the Optionee’s employment and (ii) has not terminated pursuant to Section 6.

          (d)     Upon a termination of the Optionee’s employment by reason of permanent disability or by reason of the death of the Optionee, the Option shall immediately upon the date

- 21 -

of such termination of the Optionee’s employment become exercisable with respect to the full number of Optioned Shares not previously exercised, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so on such date. To the extent exercisable, the Option may be exercised by a legal representative on behalf of the Optionee in the event of such permanent disability, or, in the case of the death of the Optionee, by the estate of the Optionee or by any person or persons who acquired the right to exercise the Option by bequest or inheritance or by reason of the death of the Optionee.

46.  Manner of Exercise. 

          (a)     The Option may be exercised in full at one time or in part from time to time for the number of Optioned Shares then exercisable by giving written notice, signed by the person exercising the Option, to the Company, stating the number of Optioned Shares with respect to which the Option is being exercised and the date of exercise thereof, which date shall be at least five days after the giving of such notice.

          (e)     Full payment by the Optionee of the Option Price for each Optioned Share purchased shall be made on or before the exercise date specified in the notice of exercise by delivery of (i) cash or a check payable to the order of the Company in an amount equal to such Option Price, (ii) shares of Common Stock owned by the Optionee having a fair market value equal in amount to such Option Price, or (iii) any combination of the preceding clauses (i) and (ii).

A.   The Company shall be under no obligation to issue any Optioned Shares unless the person exercising the Option, in whole or in part, shall give a written representation and undertaking to the Company which is satisfactory in form and substance to counsel for the Company and upon which, in the opinion of such counsel, the Company may reasonably rely, that the Optionee is acquiring such Optioned Shares for the Optionee’s own account as an investment and not with a view to, or for sale in connection with, the distribution of any such Optioned Shares, and that the Optionee will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the Securities Act of 1933, or any other applicable law.

B.   Upon exercise of the Option in the manner prescribed by this Section 8, delivery of a certificate for the Optioned Shares then being purchased shall be made at the principal office of the Company to the person exercising the Option within a reasonable time after the date of exercise specified in the notice of exercise.

47.  Non-Transferability of Option.  The Option shall not be assignable or transferable by the Optionee other than by will or the laws of descent, and shall be exercisable during the lifetime of the Optionee only by the Optionee. The Option shall terminate and become null and void immediately upon the bankruptcy of the Optionee, or upon any attempted assignment or transfer except as herein provided, including without limitation, any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition, attachment, trustee process or similar process, whether legal or equitable, upon the Option.

48.  No Special Employment Rights.  Neither the granting of the Option nor its exercise shall be construed to confer upon the Optionee any right with respect to the continuation of the Optionee’s employment by the Company (or any subsidiary of the Company) or interfere in any

- 22 -

way with the right of the Company (or any subsidiary of the Company), subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of the Optionee from the rate in existence as of the date hereof.

49.  Option Grant Subject to Shareholder Approval of Plan Amendment.  Notwithstanding anything herein to the contrary, the grant of the Option documented herein shall be subject to and contingent upon ratification or approval by the Company’s shareholders at the Company’s next annual meeting of shareholders (the “Annual Meeting”) of an amendment and restatement of the Plan, among other things, to increase the number of shares of Common Stock authorized for issuance under the Plan.  The Company shall use its best efforts to include in its next proxy statement delivered to shareholders relating to the Annual Meeting a proposal or proposals approving or ratifying such amendment to the Plan.

50.  No Rights of Stockholder.  The Optionee shall not be deemed for any purpose to be a shareholder of the Company with respect to the Option except to the extent that the Option shall have been exercised with respect thereto and, in addition, a stock certificate shall have been issued theretofore and delivered to the Optionee.

51.  Amendment.  Subject to the terms and conditions of the Plan, the Board or the committee appointed by the Board to administer this Plan (the “Committee”), whichever shall then have authority to administer the Plan, may amend this Agreement with the consent of the Optionee when and subject to such conditions as are deemed to be in the best interests of the Company and in accordance with the purposes of the Plan.

52.  Tax Withholding.  Whenever any Optioned Shares are purchased under the terms of this Agreement, the Optionee must remit or, in appropriate cases, agree to remit when due, the minimum amount necessary to satisfy all of the Company’s federal, state and local withholding (including FICA) tax requirements relating to the purchase of such Optioned Shares.  The Committee may require you to satisfy these minimum withholding tax obligations by any (or a combination) of the following means: (i) a cash payment; (ii) withholding from compensation otherwise payable to the Optionee; (iii) authorizing the Company to withhold from the Optioned Shares deliverable to the Optionee as a result of the exercise of the Option, a number of shares having a fair market value, as of the date the withholding tax obligation arises, less than or equal to the amount of the withholding obligation; or (iv) delivering to the Company unencumbered “Mature Shares” (as defined below) of Common Stock having a fair market value, as of the date the withholding tax obligation arises, less than or equal to the amount of the withholding obligation.  The Committee may approve delivery to the Company of Mature Shares up to the total amount of the Optionee’s tax liability with respect to the exercise of the Option. The Company will not deliver to the Optionee the Optioned Shares purchased pursuant to the exercise of the Option unless the Optionee remits (or in appropriate cases agree to remit) all withholding tax requirements relating to the purchase of such Optioned Shares as described above.

          The term “Mature Shares” as used herein shall mean shares of Common Stock for which the holder has good title, free and clear of all liens and encumbrances, and which such holder either (i) has held for at least six months or (ii) has purchased on the open market.

- 23 -

53.  Notices.  Any communication or notice required or permitted to be given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Optionee, to the address as appearing on the records of the Company. Such communication or notice shall be deemed given if and when (a) properly addressed and posted by registered or certified mail, postage prepaid, or (b) delivered by hand.

54.  Incorporation of Plan by Reference.  The Option is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan.  The Board or the Committee, whichever shall then have authority to administer the Plan, shall interpret and construe the Plan and this Agreement, and their interpretations and determinations shall be conclusive and binding upon the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder.

55.  Governing Law.  The validity, construction and interpretation of this Agreement shall be governed by and determined in accordance with the laws of the State of New York.

          IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date above written.

INSIGHT COMMUNICATIONS COMPANY, INC.
By:
OPTIONEE:
	Kim D. Kelly

- 24 -

EX-23.1

EXHIBIT 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements (Forms S-3, Nos. 333-58296 and 333-65776) and related prospectuses of Insight Communications Company, Inc. for the registration of up to $1 billion in aggregate offering price in various combinations of its Class A Common Stock, preferred stock, debt securities, warrants or subscription rights and the Registration Statement (Form S-8, No. 333-57808) pertaining to the Insight Communications Company, Inc. 1999 Stock Option Plan of our reports dated February 25, 2003 with respect to the consolidated financial statements of Insight Communications Company, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2002.

/s/ ERNST & YOUNG LLP

New York, New York
March 10, 2003