TCA CABLE TV INC, 424B3, 1998-01-29

TCA CABLE TV INC
424B3, 1998-01-29
CABLE & OTHER PAY TELEVISION SERVICES

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<PAGE> 1
Filed Pursuant to Rule 424(b)(3) and relating to
Registration Statement No. 333-32015

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. AN EFFECTIVE
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.

SUBJECT TO COMPLETION, JANUARY 27, 1998

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 1, 1997)

TCA CABLE TV, INC.
$150,000,000

% DEBENTURES DUE 2028 [LOGO]

The % Debentures due 2028 (the "Debentures") will mature on ,
2028. Interest on the Debentures is payable semiannually on and of each
year, beginning , 1998. The Debentures will be redeemable, in whole
or in part, at the option of TCA Cable TV, Inc. (the "Company"), at any time on
or after , 2008, at a redemption price equal to the greater of (i)
100% of their principal amount, and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted to the
date of redemption, on a semiannual basis, at the Treasury Rate (as defined
herein) plus basis points, plus in each case accrued interest thereon to the
date of redemption. The Debentures will not be subject to any sinking fund. See
"Description of Debentures."

Each holder of Debentures may require the Company to repurchase all or a portion
(but only denominations of $1,000 and any integral multiple thereof) of the
Debentures owned by such holder (the "Put Option") on , 2008 (the
"Put Option Exercise Date") at a purchase price equal to 100% of the principal
amount thereof. See "Description of Debentures."

The Debentures will be denominated in principal amounts of $1,000 or multiples
thereof and will be represented by Global Securities (as defined herein)
registered in the name of a nominee of The Depository Trust Company ("DTC"), as
Depositary. Interests in the Global Securities will be shown on, and transfers
thereof will be effected only through, records maintained by DTC and its
participants. Except as provided herein, Debentures in definitive form will not
be issued. Settlement for the Debentures will be made in immediately available
funds. The Debentures will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity for the Debentures will
therefore settle in immediately available funds. All payments of principal and
interest will be made by the Company in immediately available funds. See
"Description of Debentures -- Same-Day Settlement and Payment" herein.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- -----------------------------------------------------------------------------------------------------------------------
PER DEBENTURE % % %
TOTAL $ $ $
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Plus accrued interest, if any, from , 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .

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

The Debentures are offered by the Underwriters, subject to prior sale, when, as
and if issued by the Company and accepted by the Underwriters, and subject to
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the Debentures will be made in book-entry form through the
facilities of DTC on or about , 1998.

CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
STEPHENS INC.
UBS SECURITIES

The date of this Prospectus Supplement is February , 1998.
<PAGE> 2

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES OFFERED
HEREBY, INCLUDING OVERALLOTMENT, STABILIZING TRANSACTIONS AND SYNDICATE SHORT
COVERING TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

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PROSPECTUS SUMMARY

The following information is qualified in its entirety by the more detailed
information and financial statements and pro forma financial information
appearing elsewhere in this Prospectus Supplement and the Prospectus.

THE COMPANY

OVERVIEW

TCA Cable TV, Inc. (the "Company") is engaged in the development, operation
and management of cable television systems. As of October 31, 1997, based on
number of subscribers, the Company is the sixteenth largest cable television
operator in the United States, serving approximately 703,000 subscribers through
62 cable television systems with approximately 935,000 homes passed. Over 90% of
the Company's subscribers are located in regional clusters, primarily in Texas,
Louisiana and Arkansas. The Company also operates clusters in Oklahoma and has
one system in each of Idaho, Mississippi and New Mexico. The Company intends to
continue to concentrate its activities in these and similar non-urban markets
where residents rely on cable television to provide quality reception and
services, referred to by the Company as "classic cable markets." In addition,
through its wholly owned subsidiary, VPI Communications, Inc., d/b/a CableTime
("CableTime"), the Company is the largest third party turnkey advertising
insertion provider serving the cable television industry in the United States.

The Company has recently been experiencing significant growth in its
operations. Over the last three fiscal years, revenues, EBITDA (as herein
defined), and net income have grown at annual compound growth rates of 24%, 17%
and 22%, respectively. Such growth has resulted primarily from strategic
acquisitions, and also from internal subscriber growth, and the introduction of
new products and services.

BUSINESS STRATEGY

The Company's systematic approach of acquiring, operating and developing
cable television systems is based on the principal of increasing operating cash
flow while maintaining a high standard of subscriber service. In meeting this
objective, the Company employs the following strategies:

Regional Clustering. Over 90% of the Company's subscribers are located in
five regional clusters in three states. By acquiring and developing systems in
geographic proximity, the Company has realized significant operating
efficiencies through the consolidation of various managerial, administrative and
technical functions including the ability to serve a number of systems within a
single region through a central headend facility. Consistent with its clustering
strategy, the Company intends to continue its emphasis on growth regionally
through acquisitions of existing systems and is also considering potential joint
venture and partnership arrangements with other cable system operators. The
formation of TCA Cable Partners II is another example of this clustering
strategy. See "-- Recent Developments."

Technological Innovation and New Services. The Company has actively
invested in technological advances and system upgrades over the past several
years. The Company considers technological innovation to be an important
component of its service offerings and customer satisfaction and is continually
evaluating the technical and economic feasibility of providing enhanced or new
subscriber services. Such services are expected to include high speed internet
access, digital video, expanded pay-per-view and other interactive services. In
December 1997, the Company began offering high-speed internet access over its
cable plant in select markets and anticipates a broader roll out in 1998. The
Company plans to perform test trials with digital compression technology in
certain of its systems and expects to launch digital services to its subscribers
in fiscal 1998.

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Conservative Capital Structure. The Company adheres to a policy of
conservative leverage relative to other cable television operators in the United
States. As of October 31, 1997, the Company had a ratio of debt to EBITDA of
2.5x and 3.6x pro forma for the formation of TCA Cable Partners II. By
maintaining a conservative capital structure, the Company has been able to
generate strong cash flow, which has provided the Company with the flexibility
to upgrade its systems and to pursue acquisitions opportunistically.

Emphasis on Local Subscriber Service. The Company believes that maintaining
a strong local presence with a focus on timely subscriber service is a key
element to its long-term success. The Company has historically emphasized
subscriber service in all facets of its operations and has been recognized by
cable industry organizations as an industry leader. In 1995, TCA was awarded the
Cable Operator of the Year award by Cablevision Magazine. A cornerstone of the
Company's operating strategy is to maintain local offices where the Company can
provide timely customer service. In its cable systems, the Company maintains one
manager per approximately 10,000 subscribers, which it believes to be among the
highest ratios in the industry. The Company strives to respond to service calls
on a same day basis and has a policy of calling each subscriber following a
service call to determine the level of customer satisfaction. Through these
initiatives, the Company has been able to achieve consistently high levels of
subscriber satisfaction and the ability to compete more effectively against
alternative video entertainment offerings.

Senior management of the Company is highly experienced in the cable
television industry. The Chairman, Chief Executive Officer and President; Chief
Financial Officer; and Senior Vice President have spent 17, 13 and 15 years,
respectively, with the Company or its predecessors.

The Company was organized as a Texas corporation in December 1981 to
consolidate the ownership of four corporations which had been developing and
operating cable systems since 1965, 1973, 1975 and 1976, respectively. The
Company completed its initial public offering of common stock in 1982. The
principal executive offices of the Company are located at 3015 S.S.E. Loop 323,
Tyler, Texas 75701 and the telephone number is (903) 595-3701.

RECENT DEVELOPMENTS

Consistent with the Company's regional clustering strategy, in November
1997 the Company entered into an agreement with TCI American Cable Holdings IV,
L.P. (the "TCI Affiliate"), an affiliate of Tele-Communications, Inc., to form a
partnership, TCA Cable Partners II (the "TCI Transaction"). The Company will
contribute to TCA Cable Partners II certain cable systems in Texas and New
Mexico serving approximately 155,000 subscribers and $46.6 million in unsecured
debt and the TCI Affiliate will contribute its systems in North Texas and
Western Louisiana serving approximately 150,000 subscribers and $247.9 million
in unsecured debt, in exchange for an 80% and 20% partnership interest,
respectively, in TCA Cable Partners II. The cable systems to be contributed by
the Company and the TCI Affiliate are each valued at approximately $315 million.
The Company intends to finance the TCI Transaction with a portion of the
proceeds from a $150 million increase in the Company's principal bank line of
credit (the "Primary Credit Facility") and the issuance of $150 million in
public debt created by this Offering. Upon the closing of the TCI Transaction,
the Company will extend a loan to TCA Cable Partners II in the aggregate amount
of the unsecured debt of TCA Cable Partners II. TCA Cable Partners II will in
turn use the proceeds of the loan to retire such debt. TCA Cable Partners II
will be consolidated in the financial statements of TCA and 20% of the estimated
fair value of TCA Cable Partners II net assets will be recorded by the Company
as a redeemable minority interest at the acquisition date. The TCI Affiliate has
the right to require the Company to purchase the TCI Affiliate's 20% partnership
interest at fair market value beginning in February 2003 through February 2023
(the "Put and Call Period"), the termination date of the partnership agreement.
The Company has a corresponding right to require the TCI Affiliate to sell its
20% partnership interest in TCA Cable Partners II to the Company at fair market
value during the Put and Call Period. TCA Cable Partners II will be managed by
the

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<PAGE> 5

Company, and the Company expects the contribution of assets and debt from the
Company and the TCI Affiliate to occur on February 2, 1998. Assuming the closing
of the TCI Transaction, the Company on a pro forma basis will serve
approximately 850,000 subscribers. The closing is conditioned, among other
things, upon the receipt of various regulatory consents and other approvals.
Because, among other things, the TCI Transaction is subject to receipt of
approvals that are outside the control of the Company, there can be no assurance
that the TCI Transaction will be consummated. See "Unaudited Pro Forma Condensed
Consolidated Financial Statements" and "Business -- Recent Developments."

In September 1997, Mr. Robert M. Rogers, the founder, Chairman of the Board
and former Chief Executive Officer, and largest shareholder of the Company,
passed away. Approximately 15.2% of the Company's Common Stock (the "Rogers
Trust Stock") was bequeathed by Mr. Rogers to a trust (the "Trust"), of which
Kanaly Trust Company (the "Rogers Trustee") is trustee. The life beneficiary of
the Trust is Robyn M. Rogers, Mr. Rogers' wife, and the remainder beneficiaries
are the grandchildren of Mr. Rogers and The Rogers Foundation, a charitable
foundation established by Mr. Rogers. Under the terms of Mr. Rogers' will, the
executor of Mr. Rogers' estate must, prior to selling any shares of TCA Common
Stock owned by the estate, notify the President of the Company and provide the
Company with the opportunity to purchase the shares to be sold by the estate at
a price per share equal to the greater of (i) the closing price of TCA Common
Stock on the date prior to the date that the Company is notified of the proposed
sale or (ii) the best price available to the estate from a third party, the
price of which is to be contained in the notice to the Company. The Company must
exercise its right to purchase the shares within 15 days of the date it receives
notice from the executor and must purchase the shares to be purchased within 30
days of the date it receives notice from the executor. The executor of Mr.
Rogers' estate is the Rogers Trustee. The Rogers Trustee has indicated that it
may sell some or all of the Rogers Trust Stock held by the estate. The estate of
Mr. Rogers also owns a 50% interest in Rogers Venture Enterprises, Inc., a
corporation that holds 800,000 shares of Common Stock. Louise Rogers, Mr.
Rogers' former wife, beneficially owns approximately 13% of the Common Stock of
the Company, which percentage does not include the 800,000 shares of Common
Stock for which Louise Rogers has historically disclaimed ownership, that are
owned by Rogers Venture Enterprises, Inc., a corporation owned 50% by Louise
Rogers.

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<PAGE> 6

THE OFFERING

Issue...................... $150,000,000 of % Debentures due 2028

Maturity Date.............. , 2028

Interest Payment Dates..... and of each year, commencing
, 1998

Optional Redemption........ The Debentures will be redeemable, in whole or in
part, at the option of the Company, at any time on
or after , 2008, at a redemption price
equal to the greater of (i) 100% of their principal
amount, and (ii) the sum of the present values of
the remaining scheduled payments of principal and
interest thereon discounted to the date of
redemption, on a semiannual basis, at the Treasury
Rate (as defined herein) plus basis
points, plus in each case accrued interest thereon
to the date of redemption. See "Description of
Notes -- Optional Redemption."

Put Option................. Each holder of the Debentures may require the
Company to repurchase all or a portion (but only
denominations of $1,000 and any integral multiple
thereof) of the Debentures owned by such holder
(the "Put Option") on , 2008 (the "Put
Option Exercise Date") at a purchase price equal to
100% of the principal amount thereof, plus accrued
interest thereon, subject to certain conditions.
See "Description of Notes -- Purchase at Option of
Holder."

Ranking.................... The Debentures are senior indebtedness of the
Company and will be direct, unsecured obligations
of the Company, ranking pari passu with all other
unsecured and unsubordinated indebtedness of the
Company. The Company is a holding company and the
Debentures will be effectively subordinated to all
existing and future liabilities, including
indebtedness, of the Subsidiaries (as herein
defined), including TCA Cable Partners II after
closing the TCI Transaction. See "Description of
Debt Securities -- Ranking" in the Prospectus.

Covenants.................. The indenture for the Debentures, among other
things, contains restrictions (with certain
exceptions) on the ability of the Company and its
Subsidiaries to: (i) incur Subsidiary Debt or issue
Preferred Stock; (ii) incur Liens; (iii) enter into
Sale and Leaseback Transactions; and (iv) enter
into mergers, consolidations, or sales, leases or
transfers of all or substantially all of their
assets.

Use of Proceeds............ The estimated $148,500,000 net proceeds from the
Offering will be used by the Company to (i) repay
approximately $100 million of outstanding
indebtedness under the Company's Primary Credit
Facility incurred as a part of a loan to TCI Cable
Partners II, the proceeds of which will be used to
retire debt contributed to that partnership during
its formation (the "Partnership Loan") and (ii)
fund approximately $48.5 million of the Partnership
Loan directly. See "Use of Proceeds."

S-6
<PAGE> 7

SUMMARY FINANCIAL INFORMATION

The historical summary financial information presented below for the years
ended October 31, 1997, 1996, 1995, 1994 and 1993 and as of the end of each such
fiscal year is derived from the consolidated financial statements of the
Company, which have been audited by Coopers & Lybrand L.L.P., independent
accountants, and should be read in conjunction with the information and audited
consolidated financial statements contained in the Company's Annual Report on
Form 10-K for the year ended October 31, 1997 and included elsewhere in this
Prospectus Supplement. The pro forma summary financial information presented
below for the year ended October 31, 1997 reflects the pro forma effect of the
formation of TCA Cable Partners II.

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
------------------------------------------------------------------
HISTORICAL
------------------------------------------------------------------
PRO FORMA
1997 1997 1996 1995 1994(1) 1993
---------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AND SUBSCRIBER DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $ 375,536 $307,501 $253,308 $190,708 $162,300 $152,291
Operating expenses:
Salaries, wages and benefits... (A) 56,489 43,582 32,814 29,341 26,103
Programming costs.............. (A) 81,011 61,792 43,714 36,477 33,022
Other operating expenses....... 171,443(A) 10,307 8,444 6,641 5,808 5,026
Selling, general and
administrative............... 37,167 23,818 19,979 13,374 11,086 10,470
Depreciation and
amortization................. 54,099 44,255 37,524 28,352 33,636 33,330
---------- -------- -------- -------- -------- --------
Operating income................. 112,827 91,621 81,987 65,813 45,952 44,340
Other income..................... 79 390 333 353 1,663 321
Interest expense................. 39,286 22,182 21,932 13,848 9,748 10,971
Minority interest(2)............. 10,984 7,089 3,248 -- -- --
---------- -------- -------- -------- -------- --------
Income before income taxes....... 62,636 62,740 57,140 52,318 37,867 33,690
Income taxes..................... 25,139 24,600 22,200 21,029 14,892 13,241
---------- -------- -------- -------- -------- --------
Net income....................... $ 37,497 $ 38,140 $ 34,940 $ 31,289 $ 21,075 $ 20,449
========== ======== ======== ======== ======== ========
Earnings per common share........ $ 1.50 $ 1.53 $ 1.41 $ 1.27 $ 0.86 $ 0.83
Average shares outstanding....... 24,917 24,917 24,749 24,582 24,638 24,638
BALANCE SHEET DATA:
Total assets..................... $1,040,137 $721,132 $663,997 $454,089 $286,213 $288,077
Term debt........................ $ 565,631 $317,025 $314,493 $262,213 $126,447 $143,253
Shareholders' equity............. $ 170,667 $170,667 $146,332 $118,148 $ 98,897 $ 90,251
OTHER OPERATING AND FINANCIAL
DATA:
EBITDA(3)........................ $ 156,021 $129,177 $116,596 $ 94,518 $ 81,251 $ 77,991
EBITDA as a percentage of
revenues....................... 41.5% 42.0% 46.0% 49.6% 50.1% 51.2%
Ratio of EBITDA to interest
expense........................ 4.0x 5.8x 5.3x 6.8x 8.3x 7.1x
Ratio of debt to EBITDA.......... 3.6x 2.5x 2.7x 2.8x 1.6x 1.8x
</TABLE>

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(A) Other operating expenses (pro forma 1997) include salaries, wages and
benefits; programming costs; and other operating expenses.

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<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
--------------------------------------------------------------
HISTORICAL
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AND SUBSCRIBER DATA)
<S> <C> <C> <C> <C> <C>
OTHER OPERATING AND FINANCIAL DATA:
Capital expenditures(4)....................... $ 51,763 $ 45,902 $ 39,766 $ 28,453 $ 21,658
Ratio of earnings to fixed charges(5)......... 3.8x 3.6x 4.7x 4.8x 4.0x
OPERATING STATISTICS:
Homes passed(6)............................... 935,438 891,458 761,621 651,250 649,415
Basic subscribers(7)(8)..................... 702,659 670,500 573,951 486,852 476,312
Basic penetration(8)(9)..................... 75% 75% 75% 75% 73%
Premium units(7)(9)........................... 417,423 390,457 356,836 321,076 255,101
Premium penetration(9)...................... 59% 58% 62% 66% 54%
Annual EBITDA per subscriber(8)............... $ 175.25 $ 174.44 $ 172.16 $ 162.12 $ 161.71
Average monthly revenue per
subscriber(8)(10)........................... $ 30.81 $ 29.06 $ 27.80 $ 26.04 $ 25.71
</TABLE>

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(1) The Company adopted Statement on Financial Accounting Standards No. 109,
"Accounting for Income Taxes" during the first quarter of 1994 by
recognizing a one-time cumulative effect adjustment which reduced net
income by $1.9 million.

(2) Minority interest results from TCA Cable Partners, which was formed in May
1996 when the Company and Donrey contributed certain systems in exchange
for 75% and 25% partnership interests, respectively. Donrey has the right
to require TCA to purchase such partner's 25% partnership interest and TCA
has a corresponding right to require Donrey to sell such 25% partnership
interest to TCA. See "Business -- Development of Cable Systems." The pro
forma 1997 minority interest includes TCA Cable Partners II, which is
scheduled to be formed on February 2, 1998 when the Company and the TCI
Affiliate contribute certain systems and debt in exchange for 80% and 20%
partnership interests, respectively. The TCI Affiliate has the right to
require TCA to purchase such partner's 20% partnership interest and TCA has
a corresponding right to require the TCI Affiliate to sell such 20%
partnership interest to TCA. See "Business -- Recent Developments."

(3) "EBITDA" means earnings before interest, taxes, depreciation and
amortization. EBITDA is included as supplemental disclosure because it is
commonly used by certain investors and analysts to analyze and compare
operating performance, and to determine a company's ability to service and
incur debt. EBITDA, however, should not be considered in isolation, or as a
substitute for, net income, cash flow provided by operating activities or
other income, or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity.

(4) Capital expenditures do not include acquisitions by the Company.

(5) The ratio of earnings to fixed charges is computed by dividing fixed
charges into the sum of (a) income (loss) before cumulative effects of
changes in accounting principles, less capitalized interest, and with
adjustments to reflect appropriately the Company's majority-owned,
50%-owned affiliates, and minority owned affiliates, (b) income taxes and
(c) fixed charges. Fixed charges consist of interest on all indebtedness
and the interest component of operating rents.

(6) A home is deemed "passed" if it can be connected to the distribution system
without further extension of transmission lines.

(7) A dwelling with one or more television sets connected to a system is
counted as one subscriber.

(8) All numbers have been restated to reflect the use of Equivalent Billing
Units, which are calculated by dividing the basic service revenue by the
base rate on commercial accounts and adding the number of residential
accounts. Multiple-outlet subscribers at higher rates than the base rate
make up the difference. Annual EBITDA per subscriber is derived by dividing
cable segment EBITDA by the weighted average number of basic subscribers
during the twelve month period ended October 31 for each year presented.

(9) Premium units are calculated based on the number of premium services
subscribed to per basic subscriber. Premium penetration equals the ratio of
premium units to basic subscribers. Premium services include single channel
services offered for a monthly fee per channel and each channel offered in
a package.

(10) Excludes advertising revenues for subscribers that are not the Company's
subscribers.

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USE OF PROCEEDS

The net proceeds from the sale of Debentures offered hereby, estimated to
be approximately $148,500,000 after deducting discounts and estimated fees and
expenses in connection therewith, will be used to (i) repay outstanding
indebtedness of approximately $100 million under the Company's Primary Credit
Facility, bearing interest at a weighted average rate of 6.4% at October 31,
1997, incurred as part of a loan to TCA Cable Partners II the proceeds of which
will be used to retire a portion of the aggregate amount of the unsecured debt
contributed to TCA Cable Partners II during its formation (the "Partnership
Loan") and (ii) fund approximately $48.5 million of the Partnership Loan
directly. See "Business -- Recent Developments." The Company intends to increase
the Primary Credit Facility in January 1998 to $350 million. Repayment of such
indebtedness will provide availability under the Primary Credit Facility for
borrowing for general corporate purposes, which may include acquisitions and
stock repurchases. See "Business -- Recent Developments." The Company's net
borrowings under the Primary Credit Facility increased by approximately
$15 million in fiscal 1997. The purpose of such borrowings in 1997 was primarily
to fund acquisitions. Pending such application of proceeds, the Company will
invest the proceeds from the Offering in certificates of deposit, United States
government securities or certain other interest bearing securities. See
"Underwriting."

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
October 31, 1997, (i) on an actual basis and (ii) as adjusted on a pro forma
basis to give effect to the formation of TCA Cable Partners II and the
application of the proceeds from the Offering. See "Use of Proceeds."

<TABLE>
<CAPTION>
OCTOBER 31, 1997
---------------------
PRO FORMA
AS
ACTUAL ADJUSTED
-------- ---------
<S> <C> <C>
DEBT:
Short-term debt, including current portion of long-term
debt................................................... $ 35,009 $ 35,009
Long-term debt, net of current portion:
Primary Credit Facility................................ 170,000 268,606
9% Notes due 1999...................................... 12,000 12,000
7.26% Notes due 2005................................... 100,000 100,000
% Debentures due 2028............................. 150,000
Other.................................................. 16 16
-------- --------
Total long-term debt................................... 282,016 530,622
Redeemable minority interest........................... 122,637 189,737
SHAREHOLDERS' EQUITY:
Common Stock, par value $0.10; 60,000,000 shares
authorized; 24,991,048 shares issued................... 2,499 2,499
Additional paid-in capital................................ 51,846 51,846
Retained earnings......................................... 119,108 119,108
Less treasury stock at cost, 113,000 shares............... (2,786) (2,786)
-------- --------
Total shareholders' equity................................ 170,667 170,667
-------- --------
TOTAL CAPITALIZATION........................................ $610,329 $926,035
======== ========
</TABLE>

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial
statements give effect to the formation of TCA Cable Partners II as described in
Recent Developments herein.

These pro forma financial statements should be read in conjunction with the
historical financial statements of the Company and Management's Discussion and
Analysis of Financial Condition and Results of Operations included elsewhere in
this Prospectus Supplement. The pro forma financial statements do not reflect
any incremental sales or cost savings that the Company may achieve from the
combination. The pro forma financial statements do not purport to be indicative
of the results which actually would have been obtained if TCA Cable Partners II
had been effected on the dates indicated or of the results which may be obtained
in the future.

Although information as to the fair values, for purchase accounting
purposes, of the business of TCA Cable Partners II, individual assets and
liabilities is not complete, a preliminary estimate of the allocation of the
purchase price was made on the basis of available information. The actual
allocation of the purchase price may be different from that reflected in the pro
forma condensed consolidated financial statements. Such differences would result
from adjustments in the purchase price and refinements in the estimates of fair
values of the net assets acquired. However, the Company does not expect such
adjustments and refinements in estimates to materially affect the pro forma
information as presented.

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TCA CABLE TV, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

ASSETS

<TABLE>
<CAPTION>
TCA SYSTEMS
TCA CABLE SEPTEMBER 30, PRO FORMA
OCTOBER 31, 1997 1997 ADJUSTMENTS TOTAL
---------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Cash................... $ 3,270,190 $ 118,000 $ $ 3,388,190
Accounts receivable,
subscribers.......... 15,852,757 2,176,000 18,028,757
Accounts receivable,
other................ 1,017,070 1,017,070
Income tax
receivable........... 529,830 529,830
Property, plant and
equipment, at cost... 437,246,720 91,618,000 (44,368,000)(a) 484,496,720
Less accumulated
depreciation......... (208,416,640) (42,389,000) 42,389,000(a) (208,416,640)
------------ ------------ ------------- --------------
228,830,080 49,229,000 (1,979,000) 276,080,080
Intangibles, net....... 464,602,414 145,597,000 122,153,000(a) 732,352,414
Prepaid expenses and
other assets......... 7,029,979 211,000 1,500,000(b) 8,740,979
------------ ------------ ------------- --------------
$721,132,320 $197,331,000 $ 121,674,000 $1,040,137,320
============ ============ ============= ==============
LIABILITIES
Accounts payable....... $ 12,047,781 $ 3,299,000 $ $ 15,346,781
Accrued expenses....... 23,653,545 23,653,545
Subscriber advance
payments............. 3,522,240 3,522,240
Deferred income taxes.. 71,580,000 65,009,000 (65,009,000)(c) 71,580,000
Term debt.............. 317,025,181 248,606,000(d) 565,631,181
------------ ------------ ------------- --------------
427,828,747 68,308,000 183,597,000 679,733,747
Redeemable minority
interest............. 122,636,878 67,100,000(e) 189,736,878
SHAREHOLDERS' EQUITY
Common stock........... 2,499,105 2,499,105
Additional paid-in
capital.............. 51,845,522 51,845,522
Retained earnings...... 119,108,443 42,300,000 (42,300,000)(f) 119,108,443
Due to TCI
Communications,
Inc.................. 86,723,000 (86,723,000)(f)
------------ ------------ ------------- --------------
173,453,070 129,023,000 (129,023,000) 173,453,070
Less treasury stock at
cost................. (2,786,375) (2,786,375)
------------ ------------ ------------- --------------
170,666,695 129,023,000 (129,023,000) 170,666,695
------------ ------------ ------------- --------------
$721,132,320 $197,331,000 $ 121,674,000 $ 1,040,137,32
============ ============ ============= ==============
</TABLE>

See Accompanying Notes

S-11
<PAGE> 12

TCA CABLE TV, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
TCA CABLE TCA SYSTEMS
YEAR ENDED YEAR ENDED PRO FORMA
OCTOBER 31, 1997 SEPTEMBER 30, 1997 ADJUSTMENTS TOTAL
---------------- ------------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues............... $307,501,312 $ 68,035,000 $ $375,536,312
------------ ------------ ------------ ------------
Operating expenses:
Other operating
expenses (*)...... 147,806,854 23,636,000 171,442,854
Selling, general and
administrative.... 23,817,927 13,349,000 37,166,927
Depreciation and
amortization...... 44,255,420 12,099,000 (2,255,250)(g) 54,099,170
------------ ------------ ------------ ------------
215,880,201 49,084,000 (2,255,250) 262,708,951
------------ ------------ ------------ ------------
Operating income....... 91,621,111 18,951,000 2,255,250 112,827,361
Other income........... 389,768 (311,000) 78,768
Interest expense....... (22,182,337) (16,313,572)(h) (39,285,909)
(790,000)(h)
Minority interest...... (7,088,633) (3,895,081)(i) (10,983,714)
------------ ------------ ------------ ------------
Income before
income taxes.... 62,739,909 18,640,000 (18,743,403) 62,636,506
Provision for income
taxes................ 24,600,000 7,887,000 (7,347,414)(j) 25,139,586
------------ ------------ ------------ ------------
Net income... $ 38,139,909 $ 10,753,000 $(11,395,989) $ 37,496,920
============ ============ ============ ============
Earnings per common
share................ $ 1.53 $ 1.50
============ ============
</TABLE>

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

(*) Includes salaries, wages and benefits; programming costs; and other
operating expenses.

See Accompanying Notes

S-12
<PAGE> 13

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On November 13, 1997, the Company entered into an agreement with TCI
American Cable Holdings IV, L. P. (the "TCI Affiliate"), an affiliate of
Tele-Communications, Inc., to form a partnership, TCA Cable Partners II (the
"TCI Transaction"). The Company will contribute to TCA Cable Partners II certain
cable systems in Texas and New Mexico serving approximately 155,000 subscribers
and $46.6 million in unsecured debt and the TCI Affiliate will contribute its
systems in North Texas and Western Louisiana serving approximately 150,000
subscribers and $247.9 million in unsecured debt, in exchange for an 80% and 20%
partnership interest, respectively, in TCA Cable Partners II. The cable systems
to be contributed by the Company (the "Company Systems") and the TCI Affiliate
(the "TCA Systems") are each valued at approximately $315 million. The Company
intends to finance the TCI Transaction with a portion of the proceeds from a
$150 million increase in the Company's Primary Credit Facility and the issuance
of $150 million in public debt. Upon closing, the Company will extend a loan to
TCA Cable Partners II in the aggregate amount of the unsecured debt of TCA Cable
Partners II. TCA Cable Partners II will in turn use the proceeds of the loan to
retire such debt. TCA Cable Partners II will be consolidated in the financial
statements of TCA and 20% of the estimated fair value of TCA Cable Partners II
net assets will be recorded by the Company as a redeemable minority interest at
the acquisition date. The TCI Affiliate has the right to require the Company to
purchase the TCI Affiliate's 20% partnership interest at fair market value
beginning in February 2003 through February 2023 (the "Put and Call Period"),
the term of the partnership agreement. The Company has a corresponding right to
require TCI to sell its 20% partnership interest in TCA Cable Partners II to the
Company at fair market value during the Put and Call Period. TCA Cable Partner
II will be managed by the Company, and the Company expects the contribution of
assets and debt from the Company and the TCI affiliate to occur on February 2,
1998. Assuming the closing of the TCI Transaction, the Company on a pro forma
basis will serve approximately 850,000 subscribers. The closing is conditioned,
among other things, upon the receipt of various regulatory consents and other
approvals. Because, among other things, the TCI Transaction is subject to
receipt of approvals that are outside the control of the Company, there can be
no assurance that the TCI Transaction will be consummated.

The unaudited pro forma condensed consolidated balance sheet combines the
Company's October 31, 1997 consolidated balance sheet and the TCA Systems
September 30, 1997 combined balance sheet assuming the TCI Transaction occurred
on October 31, 1997. The unaudited pro forma condensed consolidated statement of
operations combines the Company's consolidated statement of operations for the
year ended October 31, 1997 and the TCA Systems combined statement of operations
for the year ended September 30, 1997 assuming the TCI Transaction occurred on
November 1, 1996. The fiscal year of the TCA Systems is December 31. The amounts
reported in the TCA Systems combined statement of operations for the twelve
month period ended September 30, 1997 represents the operating results for the
nine months ended September 30, 1997 plus the difference between the TCA Systems
operating results for the twelve months ended December 31, 1996 and the
operating results for the nine months ended September 30, 1996.

A description of the related pro forma adjustments is set forth below:

(a) Record the TCA Systems property, plant and equipment and
intangibles at their estimated fair value

(b) Record estimated debt issuance costs

(d) Record incremental borrowings: $150 million of Debentures due 2028
and $98,606,000 Primary Credit Facility

(e) Record redeemable minority interest at 20% of total estimated fair
value of TCA Cable Partners II net assets of $335,500,000

S-13
<PAGE> 14

(f) Eliminate TCA Systems retained earnings and due to TCI
Communications, Inc.

(g) Adjust depreciation and amortization of TCA Systems property,
plant and equipment and intangibles based on estimated fair values of
$47,250,000 and $267,750,000, respectively, and estimated useful lives of
15 and 40 years, respectively

(h) Record interest expense on incremental borrowings and amortization
of related Treasury Locks termination cost ($7,900,000) as
follows:

$150,000,000 Debentures due 2028 at 6.8%(*)
$98,606,000 Primary Credit Facility at 6.2%(*)
$7,900,000 Treasury Locks termination cost over 10 years

(*) estimated interest rates include amortization of debt issuance costs

(i) Record minority interest in TCA Cable Partners II income as
follows:

<TABLE>
<S> <C>
TCA Systems income before income taxes...................... $ 18,640,000
Company Systems income before income taxes.................. 18,852,526
Interest on TCA contributed debt of $46,600,000 at 6.8%..... (3,168,800)
Pretax impact of statement of operations pro forma
adjustments (excluding minority interest)................. (14,848,322)
------------
$ 19,475,404
TCA Cable Partners II pro forma income before income
taxes..................................................... X20%
------------
Minority interest in TCA Cable Partners II pro forma
earnings.................................................. $ 3,895,081
============
</TABLE>

(j) Tax effect pro forma adjustments at the Company's effective tax
rate of 39.2%

S-14
<PAGE> 15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with, and is qualified
in its entirety by reference to, the audited consolidated financial statements
and unaudited pro forma financial statements of the Company appearing elsewhere
in this Prospectus Supplement.

OVERVIEW

The Company is engaged in the development, operation and management of
cable television systems. As of October 31, 1997, based on number of
subscribers, the Company is the sixteenth largest cable television operator in
the United States serving approximately 703,000 subscribers through 62 cable
television systems with approximately 935,000 homes passed. Over 90% of the
Company's subscribers are located in regional clusters primarily in Texas,
Louisiana and Arkansas. The Company also operates clusters in Oklahoma and has
one system in each of Idaho, Mississippi and New Mexico. The Company intends to
continue to concentrate its activities in these and similar non-urban markets
where residents rely on cable television to provide quality reception and
services, referred to by the Company as "classic cable markets." In addition,
through its wholly owned subsidiary, VPI Communications, Inc., d/b/a CableTime
("CableTime"), the Company is the largest third party turnkey advertising
insertion provider serving the cable television industry in the United States.

The Company's cable revenues are derived from subscriber fees for basic,
expanded basic, premium and pay-per-view television services, cable installation
fees, long distance and internet access fees and the sale of local advertising
time on its cable systems. Cable revenues for the year ended October 31, 1997
increased 16% (8% excluding acquisitions) compared to the same period for 1996,
and represented 83% of the Company's total revenues in fiscal 1997.

The Company also derives revenues from CableTime. For the fiscal year ended
October 31, 1997, advertising insertion revenues represented 17% of the
Company's total revenues. As of October 31, 1997, CableTime provided services to
82 cable television operators in 467 markets, including the Company's systems,
collectively reaching approximately 2.9 million subscribers. CableTime revenues
for the year ended October 31, 1997 increased 54% (38% excluding acquisitions)
compared to the same period for 1996. During the three year period from November
1, 1994 through October 31, 1997, CableTime's revenues increased at a compound
annual growth rate of 62%, primarily as a result of CableTime's acquisition of
Cable One Corporation, an advertising insertion company based in Pennsylvania
("Cable One") in May 1996, and greater demand for advertising insertion services
by cable system operators.

S-15
<PAGE> 16

FINANCIAL HIGHLIGHTS

The following table provides segment information for the periods indicated.

<TABLE>
<CAPTION>
ADVERTISING
CABLE INSERTION TOTAL
-------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
PRO FORMA YEAR ENDED OCTOBER 31, 1997:(1)
Revenues.............................................. $321,848 $53,688 $375,536
Operating income...................................... 105,924 6,903 112,827
Depreciation and amortization......................... 52,124 1,975 54,099
Identifiable assets................................... 1,008,132 32,005 1,040,137
YEAR ENDED OCTOBER 31, 1997:
Revenues.............................................. $253,813 $53,688 $307,501
Operating income...................................... 84,718 6,903 91,621
Depreciation and amortization......................... 42,280 1,975 44,255
Capital expenditures, including acquisitions.......... 58,340 3,410 61,750
Identifiable assets................................... 689,127 32,005 721,132
YEAR ENDED OCTOBER 31, 1996:
Revenues.............................................. $218,386 $34,922 $253,308
Operating income...................................... 75,899 6,088 81,987
Depreciation and amortization......................... 36,255 1,269 37,524
Capital expenditures, including acquisitions.......... 68,631 4,932 73,563
Identifiable assets................................... 635,972 28,025 663,997
YEAR ENDED OCTOBER 31, 1995:
Revenues.............................................. $172,822 $17,887 $190,709
Operating income...................................... 61,494 4,319 65,813
Depreciation and amortization......................... 27,350 1,001 28,351
Capital expenditures, including acquisitions.......... 60,106 803 60,909
Identifiable assets................................... 441,619 12,470 454,089
</TABLE>

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

(1) Reflects the pro forma effect of the formation of TCA Cable Partners II,
which is scheduled to be formed on February 2, 1998. See "Business -- Recent
Developments."

The following table sets forth for the periods indicated certain operations
data expressed as a percentage of total revenues.

<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES FOR
YEAR ENDED OCTOBER 31,
---------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Revenues from:
Basic and expanded basic subscriptions.................... 62.9% 65.7% 66.7%
Premium and pay-per-view.................................. 13.1 14.9 17.1
Advertising(1)............................................ 18.1 14.5 10.9
Other sources............................................. 5.9 4.9 5.3
----- ----- -----
Total revenues.................................... 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and benefits.............................. 18.4% 17.2% 17.2%
Programming costs......................................... 26.3 24.4 22.9
Other operating expenses.................................. 3.4 3.3 3.5
Selling, general and administrative....................... 7.7 7.9 7.0
Depreciation and amortization............................. 14.4 14.8 14.9
----- ----- -----
Total operating expenses.......................... 70.2% 67.6% 65.5%
</TABLE>

S-16
<PAGE> 17
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES FOR
YEAR ENDED OCTOBER 31,
---------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Operating income............................................ 29.8% 32.4% 34.5%
Other income................................................ .1 .1 .2
Other expenses:
Interest expense.......................................... 7.2 8.6 7.3
Minority interest......................................... 2.3 1.3 --
Income tax................................................ 8.0 8.8 11.0
----- ----- -----
Net income.................................................. 12.4% 13.8% 16.4%
</TABLE>

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

(1) Includes revenues from both the Company's cable advertising business and net
cable advertising revenues from third parties.

<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES FOR PRO FORMA
YEAR ENDED OCTOBER 31,
1997(1)
------------------------------------
<S> <C>
Revenues.................................................... 100.0%
Operating expenses.......................................... 70.0
Operating income............................................ 30.0
Net income.................................................. 10.0
</TABLE>

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

(1) Reflects the pro forma effect of the formation of TCA Cable Partners II,
which is scheduled to be formed on February 2, 1998. See "Business -- Recent
Developments."

Year Ended October 31, 1997 Compared to Year Ended October 31, 1996

Revenues. Revenues increased by $54.2 million, or 21.4%, during the year
ended October 31, 1997 compared to the year ended October 31, 1996. Management
attributes approximately $15.3 million, or 28.2%, of the revenue increase to
internal growth in cable systems; $16.2 million, or 29.9%, to cable system
acquisitions; $9.9 million, or 18.3%, to internal growth in the Company's
advertising insertion business; $8.9 million, or 16.4%, to advertising insertion
acquisitions; and $3.9 million, or 7.2%, to long distance and internet access.

Revenues from basic and expanded basic cable television subscriptions
increased $26.9 million, or 16.1%, during the year ended October 31, 1997
compared to the year ended October 31, 1996. As a percentage of revenues,
revenues from basic and expanded basic subscriptions decreased to 62.9% of
revenues for 1997 compared to 65.7% for 1996. Revenues from premium
subscriptions and pay-per-view increased $2.5 million, or 6.7%, during 1997
compared to 1996. As a percentage of revenues, revenues from premium
subscriptions and pay-per-view decreased to 13.1% during 1997 compared to 14.9%
during 1996. The reduced percentages of revenues attributable to basic, expanded
basic, premium subscriptions and pay-per-view are the result of the increased
significance of cable advertising insertion revenues to the Company. Cable
advertising insertion revenues, including revenues from both the Company's cable
advertising business and net cable advertising revenues from third parties,
increased by approximately $19.0 million, or 51.9%, to $55.6 million for the
year ended October 31, 1997 compared to $36.6 million for the year ended October
31, 1996. As a percentage of revenues, cable advertising revenues increased to
18.1% during 1997 compared to 14.5% during 1996. Other revenues increased $5.8
million, or 46.9%, during 1997 compared to 1996 primarily due to the addition of
$3.9 million of long distance and internet access revenues. As a percentage of
revenues, revenues from other sources increased to 5.9% in 1997 compared to 4.9%
in 1996.

Expenses. Operating expenses increased $44.6 million, or 26.0%, in fiscal
1997 compared to fiscal 1996. As a percentage of revenues, operating expenses
increased to 70.2% for fiscal 1997 compared to 67.6% for fiscal 1996, reflecting
the increased significance of the Company's cable

S-17
<PAGE> 18

advertising insertion business, which experiences lower margins than the
Company's cable system operations. The increase in operating expenses during the
year ended October 31, 1997 is primarily due to the acquisitions of cable
systems and the increase in the cable advertising insertion business relative to
the cable business.

Salaries, wages and benefits increased $12.9 million, or 29.6%, during
fiscal 1997 compared to fiscal 1996. As a percentage of revenues, salaries,
wages and benefits were 18.4% for fiscal 1997 compared to 17.2% for fiscal 1996.
Programming costs increased $19.2 million, or 31.1%, during fiscal 1997 compared
to fiscal 1996. As a percentage of revenues, programming costs were 26.3% for
fiscal 1997 and 24.4% for fiscal 1996. The increase in programming costs is the
result of increases of $10.0 million in cable programming costs, $6.6 million in
the Company's payments to other cable operators of a percentage of advertising
sales and $2.6 million in network access fees in the long distance business.
Other operating expenses increased $1.9 million, or 22.1%, during fiscal 1997
compared to fiscal 1996. As a percentage of revenues, other operating expenses
were 3.4% for fiscal 1997 and 3.3% for fiscal 1996. Selling, general and
administrative expenses increased $3.8 million, or 19.2%, during fiscal 1997
when compared to fiscal 1996. As a percentage of revenues, selling, general and
administrative expenses were 7.7% for fiscal 1997 and 7.9% for fiscal 1996.
Depreciation and amortization increased $6.7 million, or 17.9%, during fiscal
1997 when compared to fiscal 1996. As a percentage of revenues, depreciation and
amortization was 14.4% for fiscal 1997 and 14.8% for fiscal 1996.

Interest expense increased $0.2 million, or 1.1%, in fiscal 1997 compared
to fiscal 1996 as a result of increased borrowings to fund acquisitions. The
Company's weighted average interest rate approximated 6.8% at both October 31,
1997 and 1996.

Income Taxes. The Company's provision for income taxes was $24.6 million
and $22.2 million in fiscal 1997 and 1996, respectively. The increase in taxes
of 10.8% in fiscal 1997 compared to fiscal 1996 was a result of a 9.8% increase
in income before income tax and an increase in the effective tax rate to 39.2%
in fiscal 1997 compared to 38.9% for fiscal 1996.

Minority Interest. Minority interest in earnings related to TCA Cable
Partners was $7.1 million for fiscal 1997 and $3.2 million for 1996. See
"Business -- Development of Cable Systems."

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically been able to meet its current and long-term
liquidity and capital requirements, including dividends and fixed charges,
through cash flow generated from operating activities, existing cash, bank lines
of credit and other external financing.

Net cash flow from operating activities increased 11.4% to $100.9 million
in fiscal 1997 from $90.5 million in fiscal 1996. The increase was principally
due to cable system acquisitions and internal growth in cable operations.

At October 31, 1997, the Company had $193.0 million in borrowings under its
bank credit facilities. The Company had $170 million borrowed under the Primary
Credit Facility which provides for up to $200 million in borrowings by the
Company and expires on June 30, 2002 with 16 quarterly commitment reductions
commencing September 1998. The Primary Credit Facility provides for interest to
be paid quarterly at prime or LIBOR plus an applicable margin. Additionally, in
connection with the planned TCI Acquisition, the Company intends to increase the
Primary Credit Facility by $150 million. At October 31, 1997 the Company also
had $23.0 million borrowed under additional credit facilities with two banks
(the "Southside Credit Facility" and the "Tyler Credit Facility" and together
with the Primary Credit Facility, the "Bank Credit Facilities") that provide for
up to $25.0 million and $4.0 million in borrowing by the Company and expire June
1998 and March 1998, respectively. During fiscal years 1997, 1996 and 1995, the
Company borrowed approximately $108.9 million, $157.6 and $315.8 million,
respectively, and repaid approximately $106.4 million,

S-18
<PAGE> 19

$105.3 million, and $180.0 million, respectively. At October 31, 1997, the
Company's bank debt carried a weighted average interest rate of 6.4%. See "Use
of Proceeds."

On September 27, 1989, the Company completed a $100 million private
placement of debt securities due August 1999 bearing an interest rate of 9.0%.
The terms of the securities call for the repayment of principal in semiannual
installments beginning February 1993. In addition, on June 23, 1995, the Company
completed a $100 million private placement of debt securities due June 2005
bearing an interest rate of 7.26%. The terms of these securities call for the
repayment of principal in annual installments beginning in June 1999.

The Company believes that EBITDA, defined as earnings before interest,
taxes, depreciation and amortization, and related measures of cash flow serve as
important financial analysis tools for measuring and comparing cable television
companies in several areas, such as liquidity, operating performance and
leverage. The Company's ratio of indebtedness to EBITDA was 2.5x, 2.7x and 2.8x
in the fiscal years ended 1997, 1996 and 1995, respectively. The Company's
interest coverage ratio, defined as the ratio of EBITDA to total interest
expense, was 5.8x, 5.3x and 6.8x in the fiscal years ended 1997, 1996 and 1995,
respectively.

The Company's capital expenditures totaled $51.8 million in fiscal 1997,
$45.9 million in fiscal 1996 and $39.8 million in fiscal 1995. Funds were
applied primarily toward the upgrade of the Company's cable systems and the
purchase of subscriber equipment, including converter boxes. The Company has
principally financed its capital expenditures through funds generated by its
operating activities, and to a lesser extent, by bank borrowings and private
placements of debt securities. The Company expects to continue the upgrade of
its cable systems in 1998 and anticipates total capital expenditure requirements
in fiscal 1998 to be comparable to levels experienced in 1997.

As part of the Company's growth strategy the Company has been actively
acquiring cable systems which meet the Company's acquisition criteria. The
Company has funded its acquisitions through internally generated funds, private
placements of debt securities, bank financing and capital contributions from DR
Partners ("Donrey"), a partnership under common control with Stephens Inc., one
of the Underwriters of this Offering. Donrey contributed five cable systems in
Arkansas serving approximately 60,000 subscribers at the formation of TCA Cable
Partners. See "Business -- Development of Cable Systems" and "Underwriting." In
fiscal years 1997, 1996 and 1995, the Company expended approximately $41.2
million, $78.1 million and $150.7 million, respectively, on cable system
acquisitions. The Company anticipates the acquisition of additional systems in
selected markets in the future. See "Business -- Development of Cable Systems"
and "Underwriting."

Also on May 1, 1996, the Company acquired Cable One, a cable television
advertising sales company based in Williamsport, Pennsylvania. Cable One
represents approximately 200 cable television systems serving approximately 1.2
million subscribers primarily in the Northeastern United States. The Company
issued 266,667 shares of its Common Stock (159,828 shares of which were issued
from treasury), valued at $8 million at the acquisition date, for 100% of the
stock of Cable One. Acquired intangibles accounted for approximately $6 million
of the $8 million purchase price. The Company also paid $1.8 million for a
non-compete agreement. Cable One is managed by TCA's advertising sales
subsidiary, Cable Time.

The Company paid dividends on its Common Stock totaling approximately $15.9
million, or $0.64 per share, in fiscal 1997, and $13.8 million, or $0.56 per
share, in fiscal 1996 and $11.8 million, or $0.48 per share, in fiscal 1995.

The Company believes that net cash provided by operating activities,
borrowings under its Bank Credit Facilities and the Company's ability to obtain
financing will provide adequate sources of short-term and long-term liquidity in
the future.

On July 24, 1997, the Company filed a shelf registration with the SEC for a
public debt offering of up to $300 million, $150 million of which will be issued
in this Offering. In connection with this Offering, the Company entered into
treasury lock transactions with a notional amount totaling
S-19
<PAGE> 20

$100 million in August 1997 (the "Treasury Locks"). The Treasury Locks are
designated as a hedge against future interest rate changes prior to the
anticipated closing of this Offering. At October 31, 1997, the Company's
liability associated with the Treasury Locks approximated $5.1 million as a
result of declining interest rates. The offset to this liability, which is
included in accrued expenses in the accompanying consolidated balance sheet, has
been capitalized in prepaid expenses and other assets in the accompanying
consolidated balance sheet. In January 1998, the Treasury Locks were terminated
at a cost of $7.9 million. The cost will be amortized over the term of the
public debt as an interest rate yield adjustment. If plans for issuance of this
Offering are terminated, the deferred Treasury Locks' termination cost of $7.9
million will be charged to expense.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Earnings Per Share (SFAS 128)

The Company will adopt Statement of Financial Accounting Standards No. 128,
"Earnings per Share", ("SFAS 128") during the fiscal year ending October 31,
1998. SFAS 128 established simplified accounting standards for computing
earnings per share and makes them comparable to international earnings per share
standards. If SFAS 128 had been applied during 1997, the Company's basic and
diluted earnings per share would have been $1.54 and $1.53, respectively.

Disclosure of Information about Capital Structure (SFAS 129)

In February 1997, the Financial Accounting Standards Board issued SFAS No.
129, "Disclosure of Information about Capital Structure" ("SFAS 129"). SFAS 129
is applicable to all entities and requires that disclosure about any entity's
capital structure include a brief discussion of rights and privileges for
securities outstanding. SFAS 129 is effective for financial statements for
periods ending after December 15, 1997.

Reporting Comprehensive Income (SFAS 130)

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" which
is effective for fiscal years beginning after December 15, 1997. This statement
establishes standards for reporting and display of comprehensive income and its
components.

Disclosures about Segments of an Enterprise and Related Information (SFAS 131)

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 is effective for
fiscal years beginning after December 15, 1997. This statement establishes
standards for the way that public companies report information about segments in
annual and interim financial statements.

S-20
<PAGE> 21

YEAR 2000 IMPACT

During the fiscal year ended October 31, 1997, the Company began a process
to identify and address issues surrounding the Year 2000 and its impact on the
Company's computer operations. The issue surrounding the Year 2000 is whether
the Company's computer systems will properly recognize date sensitive
information when the year changes to 2000, or "00." Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. As the Company has not completed their initial assessment of the impact
the Year 2000 may have on their computer operations, management can not estimate
the costs associated with ensuring the Company's systems are Year 2000
compliant. Although the Company is in the initial phases of determining the
impact of the Year 2000, management anticipates completion of the project by
January 1999, allowing adequate time for testing. However, there can be no
assurance that the Company's systems nor the computer systems of other companies
with whom the Company conducts business will be Year 2000 compliant prior to
December 31, 1999. If such modifications and conversions are not completed
timely, the Year 2000 problem may have a material impact on the operations of
the Company.

INFLATION

The net impact of inflation on operations has not been material in the last
three years due to the relatively low rates of inflation during this period. If
the rate of inflation increases the Company may increase customer rates to keep
pace with the increase in inflation, although there may be timing delays.

S-21
<PAGE> 22

BUSINESS
OVERVIEW

TCA Cable is engaged in the development, operation and management of cable
television systems. As of October 31, 1997, based on number of subscribers, the
Company is the sixteenth largest cable television system operator, serving
approximately 703,000 subscribers through 62 cable television systems, with
approximately 935,000 households passed. Over 90% of the Company's subscribers
are located in regional clusters primarily in Texas, Louisiana and Arkansas. The
Company also operates clusters in Oklahoma and has one system in each of Idaho,
Mississippi and New Mexico. The Company intends to continue to concentrate its
activities in these and similar non-urban markets where residents rely on cable
television to provide quality reception and services, referred to by the Company
as "classic cable markets." By acquiring and developing systems in geographic
proximity, the Company has realized operating efficiencies through the
consolidation of various managerial, administrative and technical functions. The
Company believes that the geographic clustering of its cable systems makes it a
cost effective cable service provider.

The following table sets forth certain operating data as of October 31,
1997:

<TABLE>
<CAPTION>
NUMBER EQUIVALENT
OF HOMES BASIC BASIC PREMIUM PREMIUM
LOCATION SYSTEMS PASSED SUBSCRIBERS PENETRATION UNITS* PENETRATION*
-------- ------- ------- ----------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Texas................ 19 336,631 240,778 72% 136,654 57%
Louisiana............ 14 231,320 173,798 75% 128,758 74%
Arkansas............. 23 300,516 234,495 78% 124,656 53%
New Mexico........... 1 16,500 10,658 65% 4,468 42%
Mississippi.......... 1 18,823 13,802 73% 11,583 84%
Oklahoma............. 3 24,348 20,925 86% 8,057 39%
Idaho................ 1 7,300 8,203 112% 3,247 40%
-- ------- ------- -------
Subtotal... 62 935,438 702,659 75% 417,423 59%
Managed Systems...... 2 5,410 3,614 67% 2,196 61%
-- ------- ------- -------
Total...... 64 940,848 706,273 75% 419,619 59%
-- ------- ------- -------
</TABLE>

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

* Premium units are calculated based upon the number of premium services
subscribed to per basic subscriber. Premium penetration equals the ratio of
premium units to basic subscribers.

Upon completion of the formation of TCA Cable Partners II, the Company will
operate 73 systems with approximately 850,000 subscribers. See "-- Recent
Developments."

Through CableTime, the Company is the largest third party turnkey
advertising insertion provider serving the cable television industry. As of
October 31, 1997, CableTime served 82 cable television operators in 467 systems,
including the Company's systems, collectively reaching approximately 2.9 million
subscribers.

The Company believes it is a low-cost provider of video entertainment in
its markets, a concept embodied in its current marketing plan, "The Best
Entertainment Value in Town." The Company typically offers its customers a range
of 35 to 82 channels including such premium channels as Home Box Office(R),
Cinemax(R), Showtime(R), The Movie Channel and The Disney Channel(R). The
Company's focus on community involvement, locally available high-quality service
and repairs, and local programming assures close ties with its customer base and
enables the Company to maintain a competitive advantage.

The Company was organized as a Texas corporation in 1981 to consolidate the
ownership of four corporations which had been developing and operating cable
television systems since 1965, 1973, 1975 and 1976, respectively. Senior
management of the Company is highly experienced in the cable television industry
and has spent the majority of their careers at the Company. The Chairman, Chief
Executive Officer and President; Chief Financial Officer; and Senior Vice
President of the

S-22
<PAGE> 23

Company have spent 17, 13 and 15 years, respectively, with the Company or its
predecessors. The Company completed its initial public offering of common stock
in 1982.

RECENT DEVELOPMENTS

Consistent with the Company's regional clustering strategy, in November
1997 the Company entered into an agreement with TCI American Cable Holdings IV,
L.P. (the "TCI Affiliate"), an affiliate of Tele-Communications, Inc., to form a
partnership, TCA Cable Partners II (the "TCI Transaction"). The Company will
contribute to TCA Cable Partners II certain cable systems in Texas and New
Mexico serving approximately 155,000 subscribers and $46.6 million in unsecured
debt and the TCI Affiliate will contribute its systems in North Texas and
Western Louisiana serving approximately 150,000 subscribers and $247.9 million
in unsecured debt, in exchange for an 80% and 20% partnership interest,
respectively, in TCA Cable Partners II. The cable systems to be contributed by
the Company and the TCI Affiliate are each valued at approximately $315 million.
The Company intends to finance the TCI Transaction with a portion of the
proceeds from a $150 million increase in the Company's Primary Credit Facility
and the issuance of $150 million in public debt created by this Offering. Upon
closing the TCI transaction, the Company will extend a loan to TCA Cable
Partners II in the aggregate amount of the unsecured debt of TCA Cable Partners
II. TCA Cable Partners II will in turn use the proceeds of the loan to retire
such debt. TCA Cable Partners II will be consolidated in the financial
statements of TCA and 20% of the estimated fair value of TCA Cable Partners II
net assets will be recorded by the Company as a redeemable minority interest at
the acquisition date. The TCI Affiliate has the right to require the Company to
purchase the TCI Affiliate's 20% partnership interest at fair market value
beginning in February 2003 through February 2023 (the "Put and Call Period"),
the termination date of the partnership agreement. The Company has a
corresponding right to require the TCI Affiliate to sell its 20% partnership
interest in TCA Cable Partners II to the Company at fair market value during the
Put and Call Period. TCA Cable Partners II will be managed by the Company, and
the Company expects the contribution of assets and debt from the Company and the
TCI Affiliate to occur on February 2, 1998. Assuming the closing of the TCI
Transaction, the Company on a pro forma basis will serve approximately 850,000
subscribers. The closing is conditioned, among other things, upon the receipt of
various regulatory consents and other approvals. Because, among other things,
the TCI Transaction is subject to receipt of approvals that are outside the
control of the Company, there can be no assurance that the TCI Transaction will
be consummated. See "Unaudited Pro Forma Condensed Consolidated Financial
Statements."

Louise Rogers has historically disclaimed ownership, that are owned by Rogers
Venture Enterprises, Inc., a corporation owned 50% by Louise Rogers.

THE CABLE TELEVISION INDUSTRY

Cable television is a service which delivers, to the home, varied
entertainment and information programming, either as transmitted by licensed
radio and television stations or programming designed specifically for cable
distribution. Radio and television signals are received by "off-air" antennae,
microwave relay systems and satellite earth stations and are modulated and
amplified at an electronic control center, or "headend," for distribution
through a network of aerial or underground coaxial cables or optical fiber, to
television sets owned by subscribers. Subscribers generally pay a monthly fee
for the service. Cable television systems generally operate under non-exclusive
franchises granted by local or state governmental authorities. The growth of the
cable television industry has been accompanied by a number of operator
consolidations.

The cable television industry began in the early 1950s. The industry's
founding and subsequent growth were the result of consumer demand for additional
programming and improved signal reception. The use of cable television as the
means of providing additional programming and improved over-the-air reception is
now generally referred to as "basic service," and typically consists of
programming available from local over-the-air television channels, public
channels, and a limited number of channels relayed from out of region cities,
typically by satellite. Additional satellite programming services are offered in
a separate "expanded basic" service for an additional charge. For an additional
monthly or individual event charge, cable operators also provide subscribers a
choice of "premium services" (referred to as "pay tv" or "pay-per-view"),
generally consisting of feature films, sporting and other special entertainment
events. The availability of cable specific channels and premium service has
established cable television as an entertainment medium in addition to
fulfilling its original purpose to provide better over-the-air television
reception. This development has led to significant growth of cable television
across the United States.

More recently, cable operators have been upgrading existing cable plant in
an effort to introduce other revenue producing services to their subscribers.
Such services are expected to include high speed internet access, telephony,
video conferencing, video on demand, and business-to-business communications.

BUSINESS STRATEGY

expanded pay-per-view and other interactive services. In December 1997, the
Company began offering commercial high-speed internet access over its cable
plant in select markets and anticipates a broader roll out in 1998. The Company
plans to perform test trials with digital compression technology in certain of
its systems and to launch digital services to its subscribers in fiscal 1998.

Conservative Capital Structure. The Company adheres to a policy of
conservative leverage relative to other cable television operators in the United
States. As of October 31, 1997, the Company had a ratio of debt to EBITDA of
2.5x and 3.6x pro forma for the formation of TCA Cable Partners II. By
maintaining a conservative capital structure, the Company has been able to
generate a strong cash flow, which has provided the Company with the flexibility
to upgrade its systems and to pursue acquisitions opportunistically.

Emphasis on Local Subscriber Service. The Company believes that maintaining
a strong local presence with a focus on timely subscriber service is a key
element to its long-term success. The Company has historically emphasized
subscriber service in all facets of its operations and has been recognized by
cable industry organizations as an industry leader. In 1995, TCA was awarded the
Cable Operator of the Year award by Cable Vision Magazine. A cornerstone of the
Company's operating strategy is to maintain local offices where the Company can
provide timely customer service. In its cable systems, the Company maintains one
manager per approximately 10,000 subscribers, which it believes to be among the
highest ratios in the industry. The Company strives to respond to service calls
on a same day basis and has a policy of calling each subscriber following a
service call to determine the level of customer satisfaction. Through these
initiatives, the Company has been able to achieve consistently high levels of
subscriber satisfaction and the ability to compete more effectively against
alternative video entertainment offerings.

DEVELOPMENT OF CABLE SYSTEMS

Subscriber growth experienced by the Company in recent years has been
derived from a combination of internally generated growth and selective
acquisitions of existing systems. System acquisitions are chosen to fit the
Company's strategy of geographically clustering cable systems in markets outside
of major metropolitan areas. Prior to and upon its acquisition of a system, the
Company conducts a review of the acquired system's cable plant and operating
policies and procedures. On the basis of its review, the Company typically makes
modifications, repairs and upgrades to the plant, and additionally institutes
operating policies and procedures designed to expand the system and improve its
profitability.

Recent significant acquisitions include the Company's acquisitions in
September 1989, when it purchased systems serving approximately 82,000
subscribers in Bryan-College Station, Paris and Victoria, Texas, Clovis, New
Mexico and Greenville, Mississippi and in 1995, systems serving approximately
72,000 subscribers in and around San Angelo, Texas and El Dorado, Fayetteville
and Russellville, Arkansas. In 1996, the Company contributed 22 systems in
Arkansas and Mississippi, serving approximately 175,000 subscribers, to TCA
Cable Partners in exchange for a 75% interest in TCA Cable Partners. The
remaining 25% interest in TCA Cable Partners is held by Donrey who contributed
five systems in Arkansas, Oklahoma and California serving approximately 60,000
subscribers. See "Underwriting." The Vallejo, California system, one of the
systems contributed by Donrey, was subsequently traded in 1996 for the Fort
Smith, Arkansas system. Following its formation, TCA Cable Partners has acquired
cable systems serving 8,100 subscribers in Van Buren and 21,000 subscribers in
Jonesboro, Arkansas. The Company believes that partnerships and joint ventures
are advantageous to acquiring strategic systems located near Company owned
systems that the Company would otherwise not be in a position to purchase
outright. In any partnership or joint venture, the Company currently intends to
maintain a majority ownership interest and will manage the systems in each
partnership. The Company believes that its future acquisitions are likely to
include partnership and joint venture transactions as well as more conventional
system acquisitions. See "-- Recent Developments."

S-25
<PAGE> 26

The following table provides historical data on the development of the
Company's cable television systems. Information with respect to systems managed
but not owned by the Company are excluded from the table.

<TABLE>
<CAPTION>
MILES OF NUMBER NUMBER OF
ACTIVE HOMES OF BASIC BASIC PREMIUM PREMIUM
PLANT PASSED SUBSCRIBERS PENETRATION UNITS* PENETRATION*
-------- ------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Period Ended October 31,
1993.................... 10,216 649,415 476,312 73% 255,101 54%
1994.................... 10,413 651,250 486,852 75% 321,076 66%
1995.................... 12,671 761,621 573,951 75% 356,836 62%
1996.................... 15,226 891,458 670,500 75% 390,457 58%
1997.................... 16,275 935,438 702,659 75% 417,423 59%
</TABLE>

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

* Premium units are calculated based on the number of premium services
subscribed to per basic subscriber. Premium penetration equals the ratio of
premium units to basic subscribers. Premium services include single channel
services offered for a monthly fee per channel and each channel offered in a
package.

The Company currently owns and operates a total of 62 cable systems and
manages two additional systems for third parties. The Company's cable systems
primarily have bandwidth capacities ranging from 300 MHZ to 750 MHZ, which
permit its systems to carry from 35 to 82 channels. The Company's current
upgrade program calls for the continued implementation of fiber optic cable
which has served a major role in expanding channel capacity, improving system
reliability, reducing operating expenses and providing additional
revenue-producing services. As of October 31, 1997, approximately 50% of the
Company's subscribers are in systems employing fiber optic plant. The Company
plans to perform test trials with digital compression technology in certain of
its systems and expects to launch digital services to its subscribers in 1998.
The Company expects that digital compression will enable it to increase the
channel capacity of its cable systems in excess of 100 channels.

As of October 31, 1997, approximately 70% of the Company's cable systems
employed addressable technology and approximately 82% of the Company's
subscribers have addressable converters. Addressable technology enables the
cable operator to electronically control the cable television services to be
delivered to each home, including pay-per-view programming. As a result, the
Company can upgrade, downgrade or disconnect services to a subscriber
immediately, without the delay or expense associated with dispatching a
technician to the subscriber's home.

SUBSCRIBER SERVICES

The Company offers services to its subscribers that are generally
comparable to those offered by other cable television operators. The basic
service offered by the Company typically includes signals of nearby over-the-air
television stations carrying the major commercial networks; independent,
specialty and educational stations; sports and educational programming; and
additional satellite programming such as signals of out of region independent
stations, news, sports and religious programming, and continuous news and
weather information. The monthly service fee for basic service generally ranges
from $9 to $14.

The Company offers an additional level of service known as "expanded basic"
service. Under this level of service the Company makes available to subscribers
a variety of packaged programming, including news, sports, educational and
entertainment channels and programs purchased from independent suppliers and
combined in different formats to appeal to different tastes. Expanded basic
service is provided at an additional monthly charge to basic service and the
incremental fee generally ranges from $8 to $14. A new product tier, known as
the "premier package," is now being introduced in systems where fiber optic
rebuilds are either finished or

S-26
<PAGE> 27

nearing completion. The premier package offers the five to twelve channels most
requested by customers in the system's area of service and the fee generally
ranges from $5.95 to $6.95.

As of October 31, 1997, approximately 90% of the Company's systems offer
four premium service channels. Premium services include channels such as: The
Movie Channel(R), Home Box Office(R), Showtime(R), Cinemax(R) and The Disney
Channel(R), which offer feature motion pictures, concerts and other special
features without commercial interruption. The Company's services do not include
adult programming.

Rates charged subscribers vary with the type of service selected. All of
the Company's cable systems are subject to rate regulation. See "-- Legislation
and Regulation." The Company's average monthly revenue per subscriber for the
year ended October 31, 1997 was $30.81. In addition to monthly subscriber fees,
the Company charges a one-time installation fee ranging from $24 to $42 to new
subscribers. Monthly charges for equipment furnished to the customer generally
range from $1 to $3. Additionally, the Company generally charges $8 to $11 per
month for each premium subscription service. Premium service charges are
sometimes discounted for multiple services. Subscribers are free to terminate
service at any time.

The Company also services commercial subscribers such as hotels, motels,
hospitals, and apartments. The Company individually negotiates the installation
and monthly fees for commercial subscribers.

ADVERTISING

In addition to its cable systems, the Company owns CableTime, the largest
third party turnkey advertising insertion provider for cable operators in the
United States. CableTime services approximately 82 cable television operators in
467 systems, including the Company's systems, collectively reaching
approximately 2.9 million subscribers. In 1996, the Company expanded its
CableTime cable advertising insertion business through the acquisition of Cable
One, a Pennsylvania-based cable advertising insertion provider serving
approximately 46 cable television operators in over 200 systems.

CableTime currently services select systems owned and operated by 21 of the
25 largest cable system operators in the United States, including Cox, TCI and
Time-Warner. CableTime concentrates its advertising services in single
geographic areas targeting a variety of cable operators in those areas to
achieve maximum efficiencies. CableTime provides a complete cable advertising
solution to both local and national advertisers by furnishing the components
necessary to create commercials from start to finish including concept
origination, design and production. Revenues from CableTime represented
approximately 17%, 14% and 9% of total revenue in fiscal years 1997, 1996 and
1995, respectively.

PROGRAMMING AND SUPPLIERS

TCA seeks and services long-term programming contracts for premium and
basic service options from independent suppliers generally for a fixed fee per
customer or for a fee equal to a specific portion of the amount charged by the
Company for the service. Programming costs increase in the ordinary course of
the Company's business as a result of increases in the number of subscribers,
expansion of the number of channels provided to customers and contractual rate
increases from programming suppliers. In order to improve programming buying
efficiencies, the Company is a member of TeleSynergy, Inc., a consortium of
twelve cable system operators who negotiate and purchase programming in bulk.
The fees paid by the Company to independent suppliers are believed by the
Company to be comparable to those paid by similarly situated cable television
companies.

National manufacturers of electronic equipment are the primary suppliers of
equipment and materials utilized in the rebuild and upgrade of the Company's
cable systems. Rebuild and upgrade

S-27
<PAGE> 28

costs of the Company's systems have increased during recent years and are
expected to remain at or near the same level for the next several years, until
the current expansion process is completed, but the Company does not anticipate
it will have a material adverse impact. The Company anticipates it will continue
to be able to fund construction out of internally generated funds. The Company
historically has not experienced any difficulty in obtaining equipment or
supplies.

The programming provided under premium service, and in some cases under
basic service, is acquired by the Company from independent sources for fees
based on viewing subscribers.

MANAGEMENT SERVICES

In addition to operating its own cable television systems, the Company
provides general management services for two systems owned by entities
affiliated with the Company ("Affiliated Companies"). The Company's management
services include: accounting, auditing, billing, marketing, computer operations,
purchasing, engineering, and other technical and administrative support services
which the Company performs pursuant to management contracts. These services are
charged to the systems on a fee basis equal to specified amounts per subscriber
for each particular service performed or a specified percentage of revenue.
Total revenues earned by the Company for management services in fiscal years
1997, 1996 and 1995 were $62,602, $61,975 and $60,388, respectively.

The Company's management contract with one of the Affiliated Companies
provides the Company a right of first refusal with respect to any proposed sales
of any of the Affiliated Company's cable systems or with respect to any cable
system acquisition opportunities which come to the attention of the Affiliated
Company. The Company does not intend to exercise its right of first refusal with
respect to relatively small cable systems which are contiguous to, or in the
vicinity of, systems owned by the Affiliated Company.

The Company believes that the terms of its management contracts with
Affiliated Companies are at least as favorable to the Company as could be
obtained with unaffiliated third parties in arm's-length transactions.

COMPETITION

The Company encounters competition for the acquisition of existing systems
and may encounter similar competition at the time of franchise renewal. The
cable television industry has undergone significant consolidation in recent
years. At the same time, the number of municipal authorities that have not
awarded cable television franchises has rapidly diminished, and thus the
competition for renewal of existing franchises has intensified. Furthermore,
certain regulations restricting competition in the industry have recently been
relaxed or rescinded, reflecting current and future policy objectives of the
Federal Communications Commission ("FCC") and in Congress with respect to
developing competition to cable operators. As a result of the foregoing, it may
be expected that the Company will encounter increased competition from other
entities having substantially greater resources than the Company. See
"-- Legislation and Regulation."

Competition for the Company's cable services arises from numerous
alternative entertainment and information sources such as movie theaters,
terrestrial broadcast television stations, direct broadcast satellite ("DBS")
operators, wireless cable operators, video cassette recorders, and other sources
of home entertainment. Cable operators face additional competition from private
satellite master antenna television ("SMATV") systems that serve condominiums,
apartment and office complexes and private residential developments. The ability
of the Company to compete for subscribers in residential and commercial
developments served by SMATV operators is uncertain. Due to changes in
technology and regulatory policies encouraging competition, the Company
anticipates significantly increased competition, particularly from direct
broadcast satellite systems, as well as telephone companies, providing video
programming to subscribers.

S-28
<PAGE> 29

The Cable Television Consumer Protection and Competition Act of 1992
("Cable Act of 1992") contains provisions, which the FCC has implemented with
regulations, to enhance the ability of cable competitors to purchase and make
available to home satellite dish earth station ("HSD") owners certain
satellite-delivered cable programming at competitive costs. The FCC and Congress
have adopted policies providing a more favorable operating environment for new
and existing technologies that provide, or have the potential to provide,
substantial competition to cable systems. These technologies include, among
others, DBS service whereby signals are transmitted by satellite to receiving
facilities located on customer premises.

DBS systems use video compression technology to increase the channel
capacity of their systems to provide movies, broadcast stations and other
program services comparable to those of cable systems. Digital satellite service
offered by DBS systems currently has certain advantages over cable systems with
respect to programming capacity and digital quality, as well as certain current
disadvantages that include high up-front customer equipment costs, line of sight
problems and a lack of local programming, local service and equipment
distribution. While this service presents a competitive threat to cable, the
Company currently is increasing channel capacity in many of its systems and
upgrading its local customer service and technical support.

Cable operators also compete with wireless distribution services such as
multichannel, multipoint distribution services ("MMDS") which use low-power
microwave frequencies to transmit video programming over-the-air to subscribers.
Certain MMDS operators are authorized to provide or are providing broadcast and
satellite programming to subscribers in areas served by the Company's cable
systems. In addition the Telecommunications Act of 1996 ("1996 Telecom Act")
allows telephone companies and electric utility companies to provide video
services in competition with services provided by cable systems. See
"-- Legislation and Regulation."

Advances in communications technology as well as changes in the marketplace
and the regulatory and legislative environment are constantly occurring. Such
changes could have an adverse effect on the Company's financial condition and
results of operations. At this time, the impact of such changes is not known or
estimable.

EMPLOYEES

On October 31, 1997, the Company had 1,654 full-time employees, none of
whom was represented by a union. The Company has not experienced any work
stoppages and considers its employee relations to be good. The Company's
customer services are provided by employees rather than independent contractors.

LEGISLATION AND REGULATION

Regulation

General. Cable television systems are regulated extensively by federal,
local and sometimes state authorities. Local and state regulations generally
relate to the awarding of franchises, rate regulation, customer service
standards and other operational requirements.

Federal Regulation

General. Federal regulation of cable television systems is affected
primarily through the FCC. Regulations promulgated by the FCC contain detailed
provisions relating to virtually all aspects of the cable industry including
rate regulations, must carry and retransmission consent for carriage of
broadcast signals, technical standards, customer service standards, competition,
programming, franchise issues, commercial leased access channels, ownership of
cable television systems, non-duplication of network programming, syndicated
program exclusivity, sports program blackouts, equal employment opportunities,
comprehensive reporting requirements, signal leakage standards,

S-29
<PAGE> 30

emergency alert systems and other matters. The FCC is authorized to impose
monetary fines on cable system operators for violations of FCC rules and may
also issue cease and desist orders.

Cable Communications Policy Act of 1984; the Cable Act of 1992; and the
1996 Telecom Act. On October 11, 1984, Congress passed the Cable Communications
Policy Act of 1984 ("Cable Act of 1984"). A major objective of Congress in
passing that law was to clarify the regulatory relationship between franchisers
and cable operators. On October 5, 1992 Congress enacted the Cable Act of 1992,
which expands the scope of cable industry regulation beyond that imposed by the
Cable Act of 1984. The 1996 Telecom Act was signed into law on February 8, 1996.
This new law alters the regulatory structure governing the nation's
telecommunications providers. It removes barriers to competition in both the
cable television market and the local telephone market. Among other things, it
reduces the scope of cable regulation. Provisions of these laws which the
Company believes may have a significant impact on its operations are summarized
below.

Rate Regulations. All of the Company's cable systems are or will be subject
to rate regulation. Pursuant to the Cable Act of 1992, the FCC has established
rate standards and procedures governing regulation of basic cable service rates.
Franchising authorities may "certify" to the FCC that they will follow the FCC
standards and procedures in regulating basic rates and, once such certification
is made, the franchising authorities will assume rate regulation authority over
basic rates. The Cable Act of 1992 also requires that the FCC, upon complaint
from a franchising authority, review the "reasonableness" of rates for
additional tiers of cable service. However, the 1996 Telecom Act ends FCC rate
regulation of such additional tiers of service as of March 31, 1999, although
legislation is pending before Congress, which, if enacted, would extend that
date. Only rates for premium pay channels and single event pay-per-view services
are excluded entirely from rate regulation. Additionally, the Cable Act of 1992
imposes rate regulation pursuant to an FCC formula for the sale and lease of
cable equipment such as converters, remote controls and additional outlets "on
the basis of actual cost." It is impossible to predict the exact impact of rate
regulation upon existing and future rates of the Company, but such rate
regulation could result in denial of requested rate increases and in reduction
of existing rate levels. In addition, proposals for even more stringent rate
regulation, including a rate freeze, are pending before Congress and the FCC.
The Company can not predict whether or to what extent new rate regulation may be
adopted.

The Cable Act of 1992 prohibits cable systems which have addressable
technology and addressable converters in place from requiring cable subscribers
to purchase service tiers above the basic level of service as a condition to
purchasing premium movie channels. If cable systems do not have such addressable
technology or addressable converters in place, they are given until December
2002 to comply.

Retransmission Consent. The Cable Act of 1992 establishes a choice for
broadcasters between "must carry" rights (as described below) or "retransmission
consent" rights. As of October 1993, cable operators are required to secure
permission from broadcasters that have selected retransmission consent before
retransmitting the broadcaster's television signals. Local and distant
broadcasters can require cable operators to make payments as a condition to
granting such consent for carriage of the broadcast stations on the Company's
cable systems.

The Cable Act of 1992 imposes obligations to carry "local" broadcast
stations should such stations choose a "must carry" right as opposed to the
"retransmission consent" right described above. Generally, the cable operator
must dedicate up to approximately one-third of its channel capacity for carriage
of commercial television stations and additional channels for non-commercial
television stations. The constitutionality of these must carry requirements was
affirmed in March 1997 by the U.S. Supreme Court.

Programming Costs and Exclusivity. Pursuant to the Cable Act of 1992, the
FCC has adopted regulations regarding the sale and acquisition of cable
programming in which a cable operator has an attributable interest. The
legislation and the subsequent FCC regulations preclude most exclusive
programming contracts, limit to some degree "volume discounts" for programming
that can be
S-30
<PAGE> 31

offered to affiliated cable operators, and require that such cable programmers
make their programming services available to competing video technologies such
as wireless cable systems and direct to the home broadcast satellite operators
on terms and conditions that do not discriminate against such competing
technologies.

Ownership Restrictions and Market Entry. The 1996 Telecom Act allows
telephone companies to compete directly with cable operators by repealing the
historic telephone company/cable cross-ownership ban and the FCC's video dial
tone regulations. This allows local exchange carriers ("LECs"), including the
regional Bell Operating Companies, to compete with cable operators both inside
and outside their telephone service areas. Cable systems could be placed at a
competitive disadvantage if the delivery of video services by LECs becomes
widespread since LECs are not required, under certain circumstances, to obtain
local franchises to deliver such video services or to comply with the variety of
obligations imposed upon cable systems under such franchises. Because of their
resources and cross-subsidization issues, LECs could be formidable competitors
to traditional cable operators, and certain LECs have begun offering cable
service.

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

The 1996 Telecom Act eliminates statutory restrictions on broadcast/cable
cross-ownership (including broadcast network/cable restrictions), but leaves in
place existing FCC regulations prohibiting local cross-ownership between
television stations and cable systems. The 1996 Telecom Act also eliminates the
three year holding period required under the 1992 Cable Act's "anti-trafficking"
provision. The 1996 Telecom Act leaves in place existing restrictions on cable
cross-ownership with SMATV and MMDS facilities, but lifts those restrictions
where the cable operator is subject to effective competition. In January 1995,
however, the FCC adopted regulations which permit cable operators to own and
operate SMATV systems within their franchise area, provided that such operation
is consistent with local cable franchise requirements.

The FCC recently adopted rules relating to the ownership of cable wiring
located inside multiple dwelling unit complexes. The FCC has concluded that such
wiring can, in certain cases, be unilaterally acquired by the complex owners,
making it easier for complex owners to terminate service from the incumbent
cable operator in favor of a new entrant.

Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a cable
system from devoting more than 40% of its activated channel capacity to the
carriage of affiliated national program services. A companion rule establishing
a nationwide ownership cap on any cable operator equal to 30% of all domestic
cable subscribers has been stayed pending further judicial review.

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. Although the 1996 Telecom Act clarifies that traditional cable
franchise fees may be based only on revenues related to the provision of cable
television services, it also provides that local franchising authorities
("LFAs") may require reasonable, competitively neutral compensation for
management of the public rights-of-way when cable operators provide
telecommunications service. The 1996 Telecom Act prohibits LFAs from requiring
cable operators to provide telecommunications service or facilities as a
condition of a franchise grant, renewal or transfer, except that LFAs can seek
"institutional networks" as part of such franchise negotiations. The favorable
pole attachment rates afforded cable operators under federal law can be
gradually increased by utility companies owning the poles

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(beginning in 2001) if the cable operator provides telecommunications service,
as well as cable service, over its facilities.

Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators. One critical
component of the 1996 Telecom Act to facilitate the entry of new
telecommunications providers (including cable operators) is the interconnection
obligation imposed on all telecommunications carriers. However, many of the
specific terms and conditions for such interconnection will remain uncertain
until they are resolved by the courts, the FCC and state regulatory commissions.

Customer Service/Technical Standards. Pursuant to the Cable Act of 1992,
the FCC has adopted regulations establishing comprehensive standards for
customer service and technical system performance. Franchising authorities are
allowed to enforce stricter customer service requirements than the FCC
standards.

Access Channels. LFAs can include franchise provisions requiring cable
operators to set aside certain channels for public, educational and governmental
access programming. Federal law also requires a cable system with 36 or more
channels to designate a portion of its channel capacity (up to 15% in some
cases) for commercial leased access by unaffiliated third parties.

Other Provisions. The Cable Act of 1992 contains a host of other regulatory
provisions. Together with the Cable Act of 1984 and the 1996 Telecom Act, the
comprehensive regulatory framework for cable television systems has been
created. Violation by a cable operator of the statutory provisions or the rules
and regulations of the FCC can subject the operator to substantial monetary
penalties and other significant sanctions.

The majority of the Cable Act of 1984 remains in place. The Cable Act of
1984 continues to: (a) affirm the right of franchising authorities to award one
or more franchises for cable; (b) require cable television systems with 36 or
more "activated" channels to reserve a percentage of such channels for
commercial use by unaffiliated third parties; (c) permit franchise authorities
to require the cable operator to provide channel capacity, equipment and
facilities for public, educational and government access; (d) provide
subscribers an opportunity to lock out offensive channels from personal
reception; (e) establish a federal policy for use of subscriber lists and
subscriber information; (f) establish civil and criminal liability for
unauthorized reception or interception of programming offered over a cable
television system or satellite delivered services; and (g) contain provisions
governing cable operators' compliance with equal employment opportunity
programs.

Many of the specific obligations imposed on cable television systems under
these laws and regulations are complex, burdensome and will continue to increase
the Company's cost of doing business. Various provisions of the Federal laws and
regulations applicable to cable television have been appealed in the courts. The
outcome of some of those appeals and the potential impact on the Company is
uncertain. In addition, regulatory requirements for cable television are subject
to continual changes through actions of Federal, state and local governmental
authorities.

ENVIRONMENTAL REGULATION

As an owner, lessee and operator of real property, the Company is subject
to Federal, state and local environmental laws and regulations relating to
disposal of waste and hazardous materials, cleanup of contaminated property and
operation of underground storage tanks. The Company believes that it is in
material compliance with all applicable environmental laws and regulations.

Cable television systems are subject to the Copyright Act of 1976 (the
"Copyright Act"). The Copyright Act requires the carrier of television signals
to have a copyright license. The license for television broadcast signals is
compulsory under the provisions of the Copyright Act and subjects the licensee
to be in compliance with certain copyright and FCC regulations. Additionally, a
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<PAGE> 33

semiannual royalty payment must be made to the U.S. Copyright Office and is
generally calculated as a percentage of each system's gross receipts. The U.S.
Copyright Office is empowered to review and increase copyright rates.

Carriage of any television broadcast station by a cable system in a manner
inconsistent with applicable FCC regulations, the Copyright Act, or copyright
regulations, can subject the cable system operator to full copyright liability,
including a potential copyright infringement action for material damages and
suspension of the operator's compulsory license. Cable systems do not receive a
compulsory license and are subject to the general copyright laws, with respect
to the transmission of non-broadcast programming.

Various legislative proposals have been introduced and considered from time
to time in Congress that, if adopted, would materially revise the Copyright Act.
The proposals include, among other things, a significant increase in the rate
structure for royalty fees, imposition of restrictions on carriage of television
broadcast programming and elimination of the compulsory license for cable system
carriage of television broadcast signals. The U.S. Copyright Office recently
recommended to Congress substantial changes in the cable compulsory license and
similar recommendations have been made by other government agencies and
interested parties. Although none of these proposals has been enacted, it can be
expected that similar proposals to change the Copyright Act and royalty fee
structure will be made in the future, and if enacted, could have an unfavorable
impact on the Company.

FRANCHISES

Each local government authority typically issues a non-exclusive permit or
enacts a non-exclusive franchise ordinance for the construction and operation of
a cable television system within its borders after considering presentations by
competing cable television companies. The Company's franchises normally require
that 2% to 5% of the gross revenues of the cable system be paid to the
franchising authority.

Effective January 1, 1987, rates charged to subscribers could no longer be
regulated by local authorities in areas where the FCC determined that cable
television systems were subject to "effective competition." Congress in the
Cable Act of 1992 amended the effective competition standard in a manner that
subjects virtually all of the Company's systems to rate regulation. See
"-- Legislation and Regulation."

FCC rules and some franchises generally require approval by the franchising
authority for the sale of a system. See "-- Legislation and Regulation." Most of
the Company's franchises can be terminated prior to their stated expiration for
breach of material provisions. The Company holds approximately 235 franchises
with unexpired terms ranging generally from one to 40 years. No one franchise
accounts for more than 10% of the Company's total revenue.

Franchises have historically been renewed for companies that have provided
adequate service and have complied generally with the franchise terms.
Additionally, the Cable Act of 1984 established renewal procedures designed to
protect incumbent franchisees against arbitrary denial of renewal. The Company
believes that it has provided satisfactory levels of service and has maintained
favorable relationships with local communities and anticipates that all or
substantially all of its franchises will be renewed, although there can be no
assurance of such renewals. In addition, other applicants have an opportunity to
compete for the franchise upon its expiration. See "-- Competition." In
connection with a renewal, the franchising authority may impose different and
more stringent terms, the impact of which cannot be predicted. To date, however,
all of the Company's franchises have been renewed or extended, generally at, or
prior to, their stated expirations, and on modified, but not unduly burdensome,
terms.

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PRIVATE SECURITIES LITIGATION REFORM ACT

The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Prospectus Supplement and other materials filed or to be filed by the Company
with the Securities and Exchange Commission (as well as information included in
oral statements or other written statements made or to be made by the Company)
contains statements that are forward-looking, such as statements relating to
plans for future expansion and other business development activities as well as
other capital spending, financing sources and the effects of regulation and
competition. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the future
and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to development and
construction activities, dependence on existing management, leverage and debt
service (including sensitivity to fluctuations in interest rates), domestic or
global economic conditions, changes in federal or state tax laws or the
administration of such laws and changes in laws or regulations.

DESCRIPTION OF DEBENTURES

The following description of the particular terms of the Debentures offered
hereby (referred to in the accompanying Prospectus as the "Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made. In addition, such
description is qualified in its entirety by reference to the Indenture under
which the Debentures offered hereby are issued referred to in the Prospectus.
Capitalized terms used but not defined herein or in the Prospectus shall have
the meanings ascribed to them in the Indenture.

GENERAL

The Debentures offered hereby constitute a series of Debentures under the
Indenture referred to in the Prospectus, dated as of January 30, 1998, between
the Company and Chase Bank of Texas, National Association, as Trustee under the
Indenture. Such series is limited to $150,000,000 aggregate principal amount.
The Debentures are to mature on , 2028 (the "Stated Maturity"). The
Debentures are issuable in denominations of $1,000 and in any integral multiple
thereof.

Each Debenture will bear interest from , 1998, at the rate of
% per annum, payable on and of each year (each as "Interest Payment Date"),
commencing , 1998. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Interest will be payable to the person in
whose name the Debenture is registered at the close of business on the
or next preceding the or Interest
Payment Date.

The provisions of the Indenture relating to legal defeasance and covenant
defeasance (described under the caption "Description of Debt
Securities -- Defeasance" in the Prospectus) will apply to the Debentures.

PURCHASE AT OPTION OF HOLDER

Each holder of the Debentures will have the right to require the Company to
repurchase all or a portion (which portion must be $1,000 or any integral
multiple thereof) of the Debentures owned by such holder (the "Put Option") on
, 2008 (the "Put Option Exercise Date") at a purchase price equal to
100% of the principal amount of the Debentures (or portion thereof, as
appropriate) plus accrued interest thereon, and will be paid by the Company in
immediately available funds, subject to certain conditions.

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<PAGE> 35

A holder must provide the Company with notice of its intention to exercise
the Put Option during the period from and including , 2008, through
and including , 2008. Such notice, once given, will be irrevocable.
Any notice of exercise given by each holder exercising the Put Option shall
state, among other things, (i) if applicable, the certificate number(s) of the
Debentures to be delivered by such holder for purchase by the Company; (ii) the
portion of the principal amount of each Debenture to be purchased for each
certificate, which portion must be $1,000 or an integral multiple thereof; and
(iii) that such Debentures (or portion thereof) are to be purchased by the
Company pursuant to the applicable provisions of the Debentures.

So long as the Debentures are represented by the Global Securities (as
defined below), only Cede & Co., as the sole registered holder of the
Debentures, may give notice of intention to exercise the Put Option.
Accordingly, each Beneficial Owner (as defined below) of an interest in the
Global Securities representing the Debentures who wishes to exercise the Put
Option will be required to instruct the participant through which it owns its
interest therein to instruct DTC, on behalf of Cede & Co., to give the required
notice. Different firms may have different deadlines for accepting instructions
from their customers. Accordingly, each Beneficial Owner of an interest in the
Global Securities representing the Debentures should consult the participant
through which it owns its interest therein for the deadline for such
participant. See "-- Book-Entry System."

The Company will comply with the provisions of Rule 14e-1 and any other
rules under the Securities Exchange Act of 1934, as amended (the "Securities
Exchange Act"), if required and will file any schedule if required thereunder in
connection with any offer by the Company to purchase the Debentures.

Payment of the repurchase price for a Debenture (or portion thereof) for
which a notice of exercise has been delivered is conditioned upon delivery or
book-entry transfer of such Debenture (together with necessary endorsements) to
the Paying Agent on the Put Option Exercise Date. See "Book-Entry System." Once
so delivered or transferred, payment of the repurchase price for such Debenture
(or portion thereof) will be made by wire transfer of immediately available
funds on the Put Option Exercise Date in an amount equal to the repurchase price
in respect of the Debentures that are subject to the relevant notice of
exercise. If the Paying Agent holds immediately available funds sufficient to
pay the repurchase price in respect of such a Debenture on or before the day of
the Put Option Exercise Date, then from and after the Put Option Exercise Date,
such Debenture (or portion thereof) will cease to be Outstanding and interest
thereon will cease to accrue, whether or not such Debenture is delivered to the
Paying Agent, and all other rights of the holder in respect of the Debenture (or
portion thereof), including the holder's right to require the Company to
repurchase such Debenture (or portion thereof), shall terminate and lapse (other
than the right to receive the repurchase price in immediately available funds by
wire transfer upon delivery of such Debenture).

In the case where any Interest Payment Date, Put Option Exercise Date or
Stated Maturity shall not be a Business Day, the payment of interest or any
repurchase price or principal need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date, Put Option Exercise Date or at Stated Maturity, and
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Put Option Exercise Date or Stated Maturity, as the
case may. Business Day means each day which is not a Saturday, Sunday or other
day on which banking institutions in The City of New York or Dallas, Texas are
authorized or required by law or executive order to be closed.

OPTIONAL REDEMPTION

The Debentures will be redeemable, in whole or in part, at the option of
the Company, at any time after , 2008, on at least 30 but not more than
60 days prior notice mailed to the holder, at a redemption price equal to the
greater of (i) 100% of their principal amount and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
dis-

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<PAGE> 36

counted to the date of redemption, on a semiannual basis, at the Treasury Rate
(as defined herein) plus basis points, plus in each case accrued interest
thereon to the date of redemption.

If money sufficient to pay the redemption price of and accrued interest on
all Debentures (or portions thereof) to be redeemed on the redemption date is
deposited with the Trustee on or before the redemption date and certain other
conditions are satisfied, on and after such date interest will cease to accrue
on such Debentures (or such portions thereof) called for redemption.

"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Debentures to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Debentures. "Independent Investment Banker" means one of
the Reference Treasury Dealers appointed by the Trustee after consultation with
the Company.

"Comparable Treasury Price" means, with respect to any redemption date, (A)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day next
preceding such redemption date.

"Reference Treasury Dealer" means each of Chase Securities Inc.,
NationsBanc Montgomery Securities LLC and UBS Securities LLC and their
respective successors and, at the option of the Company, additional Primary
Treasury Dealers; provided, however, that if any of the foregoing shall cease to
be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer.

"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield held to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.

SINKING FUND

There is no provision for a sinking fund for any of the Debentures.

BOOK-ENTRY SYSTEM

The Depository Trust Company, New York, New York ("DTC"), will act as
securities depositary for the Debentures. The Debentures will be represented by
global securities (collectively, the "Global Securities") registered in the name
of Cede & Co., DTC's partnership nominee. The provisions set forth under
"Description of Debt Securities -- Book Entry System" in the accompanying
Prospectus will be applicable to the Debentures. Accordingly, beneficial
interests in the Debentures will be shown on, and transfers thereof will be
effected only through, records maintained by DTC and its participants. Except as
described under "Description of Debt Securities -- Book-Entry System" in the
accompanying Prospectus, owners of beneficial interests in the Global Securities
will not be entitled to receive Debentures in definitive form and will not be
considered holders of Debentures.

The following summary is based on information furnished by DTC:

DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the United

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States Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the United States Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities and Exchange Act. DTC holds securities that its participants ("Direct
Participants") deposit with DTC. DTC also facilitates the settlement among
Direct Participants of securities transactions, such as transfers and pledges,
in deposited securities through electronic computerized book-entry changes in
Direct Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to DTC's system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its Direct
and Indirect Participants are on file with the Securities and Exchange
Commission.

Purchases of Debentures under DTC's system must be made by or through
Direct Participants, which will receive a credit for such Debentures on DTC's
records. The ownership interest of each actual purchaser of each Debenture
represented by a Global Security ("Beneficial Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
Transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which such Beneficial Owner entered into the
Transaction. Transfers of ownership interests in a Global Security are to be
accomplished by entries made on the books of Direct or Indirect Participants
acting on behalf of Beneficial Owners. Beneficial Owners of a Global Security
will not receive Debentures in definitive form representing their ownership
interest therein, except in the event that use of the book-entry system for the
Debentures is discontinued or upon the occurrence of certain other events
described herein or in the Prospectus.

To facilitate subsequent transfers, each Global Security is registered in
the name of DTC's nominee, Cede & Co. The deposit of a Global Security with DTC
and its registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of a Global
Security, DTC's records reflect only the identity of the Direct Participants to
whose accounts such Debentures are credited, which may or may not be the
Beneficial Owners. The Direct and Indirect Participants will remain responsible
for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners, and by Beneficial
Owners to Direct Participants and Indirect Participants, Indirect Participants
to Direct Participants, and Direct Participants to DTC, will be governed by
arrangements made among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Different firms may have
different deadlines for accepting instructions from their customers.
Accordingly, each Beneficial Owner of an interest in the Global Securities
representing the Debentures should consult the Participant through which it owns
its interest therein for the deadlines for such Participants. So long as the
Debentures are represented by the Global Securities, redemption notices shall be
sent to Cede & Co., as the sole holder of the Debentures.

Neither DTC nor Cede & Co. will consent or vote with respect to the Global
Securities. Under its usual procedures, DTC mails an omnibus proxy (an "Omnibus
Proxy") to the Company as soon as possible after the applicable record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose Accounts the Debentures are credited on the applicable
record date (identified in a listing attached to the Omnibus Proxy).
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<PAGE> 38

Principal and interest payments on the Global Securities representing the
Debentures will be made in immediately available funds to DTC. DTC's practice is
to credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on such date. Payments by
Direct or Indirect Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name", and will be the responsibility of such Participant and not of DTC, the
Trustee or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal, premium, if any, and
interest to DTC is the responsibility of the Company or the Trustee,
disbursement of such payments to Direct Participants shall be the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants. Neither the Company nor the
Trustee will have any responsibility or liability for the disbursements of
payments in respect of ownership interests in the Debentures by DTC or the
Direct or Indirect Participants or for maintaining or reviewing any records of
DTC or the Direct or Indirect Participants or for maintaining or reviewing any
records of DTC or the Direct or Indirect Participants relating to ownership
interest in the Debentures or the disbursement or payments in respect thereof.

DTC may discontinue providing its services as securities depositary with
respect to the Debentures at any time by giving reasonable notice to the Company
or the Trustee. Under such circumstances, and in the event that a successor
securities depositary is not obtained, Debentures in definitive form are
required to be printed and delivered to each holder.

The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
Debentures in definitive form will be printed and delivered to each holder.

The information in this section concerning DTC and DTC's system has been
obtained from sources that the Company believes to be reliable, but neither the
Company nor the Underwriters take any responsibility for the accuracy thereof
and such information is subject to any changes to the arrangements between the
Company and DTC and any changes to such procedures that may be instituted
unilaterally by DTC.

SAME-DAY SETTLEMENT AND PAYMENT

Settlement for the Debentures will be made by the Underwriters in
immediately available funds. So long as DTC continues to make its Same-Day Funds
Settlement System available to the Company, all payments of principal and
interest on the Debentures will be made by the Company in immediately available
funds.

The Debentures will trade in DTC's Same-Day Funds Settlement System until
maturity, and therefore DTC will require secondary trading activity in the
Debentures to be settled in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Debentures.

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UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement"), the Company has agreed to sell to Chase
Securities Inc., NationsBanc Montgomery Securities LLC, Stephens Inc. and UBS
Securities LLC (the "Underwriters"), and the Underwriters have agreed to
purchase, the principal amount of the Debentures set forth opposite their names
below. In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the Debentures
offered hereby if any of the Debentures are purchased.

<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT
------------ ----------
<S> <C>
Chase Securities Inc........................................ $
NationsBanc Montgomery Securities LLC.......................
Stephens Inc................................................
UBS Securities LLC..........................................
----------
Total............................................. $
==========
</TABLE>

The Underwriters have advised the Company that they propose initially to
offer the Debentures to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of % of the principal amount of the
Debentures. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of % of the principal amount of the Debentures. After the
initial public offering, the public offering price, concession and discount may
be changed.

The Debentures are a new issue of securities with no established trading
market and will not be listed on any securities exchange. The Company has been
advised by the Underwriters that the Underwriters intend to make a market in the
Debentures, but are not obligated to do so and may discontinue market making at
any time without notice. No assurance can be given as to the existence or
liquidity of a trading market for the Debentures.

Settlement for the Debentures will be made in immediately available funds
and all secondary trading in the Debentures will settle in immediately available
funds. See "Description of the Debentures -- Same-Day Settlement and Payment."

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.

Chase Bank of Texas, National Association, an affiliate of Chase Securities
Inc., is the managing agent for and a lender under the Company's Primary Credit
Facility and the Trustee under the indenture covering to the Debentures.
NationsBank of Texas, N.A. and NationsBank, N.A., affiliates of NationsBanc
Montgomery Securities LLC, are the administrative agents for and lenders under
the Company's Primary Credit Facility and the sole lender under the Tyler Credit
Facility. Each of the Underwriters, or affiliates thereof, participate, and may
in the future participate, on a regular basis in various other general financing
and banking transactions for the Company and its affiliates, and have received
and will in the future receive fees and compensation in connection with those
and other transactions.

The Company may be using proceeds from the Offering to repay certain
indebtedness under the Primary Credit Facility. See "Use of Proceeds."
Accordingly, affiliates of Chase Securities Inc., NationsBanc Montgomery
Securities LLC will receive their proportionate share of any repayment by the
Company of amounts outstanding under the Primary Credit Facility from the net
proceeds of the Offering. Accordingly, the Offering will be conducted pursuant
to Section 2710(c)(8) of the Conduct Rules of the National Association of
Securities Dealers.

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Stephens Inc. is owned by Stephens Holding Company, which is owned by
Stephens Group, Inc. ("Stephens Group"). Donrey, which is a partner with the
Company in TCA Cable Partners, is also owned by Stephens Holding Company and
Stephens Group, which hold 1% and 99% general partnership interests,
respectively. In May 1996, TCA Cable Partners was formed when the Company
contributed 22 cable systems with approximately 175,000 subscribers and Donrey
contributed five cable systems with approximately 60,000 subscribers. Donrey
received a 25% interest in TCA Cable Partners for the cable systems it
contributed to TCA Cable Partners. Additionally, the Stephens Group and the
Company entered into an agreement dated May 1, 1996 whereby Stephens Group
agreed to provide the Company with nonexclusive financial advisory services with
respect to the Company's continuing review of strategic and financial planning
matters for a ten year period. As compensation for the above-described financial
advisory agreement, the Company issued a warrant to Stephens Group to purchase
300,000 shares of Company Common Stock at an exercise price of $30.00 per share
(the "Warrant"). On April 11, 1996, the day the Company executed the Warrant,
the closing price of the Company's Common Stock as reported on Nasdaq National
Market was $28 5/8. The Warrant is exercisable in two installments with one-half
exercisable beginning on May 1, 2001 and the other half beginning on May 1,
2006. Unless terminated earlier in accordance with its terms, the Warrant will
expire after May 1, 2007. The Company has granted certain registration rights to
Stephens Group with respect to the shares of Common Stock issued upon exercise
of the Warrant, including two demand registrations and unlimited piggyback
registrations. The Company and Stephens Group, or the holder of the Warrant,
will each pay one-half of the fees associated with each such registration.
Stephens Group and its affiliates held 40,000 shares of the Company's Common
Stock on October 31, 1997. Mr. Fred Smith, a director of the Company, was the
former Chairman of the Management Committee of Donrey and a consultant to Donrey
from August 1993 to August 1996. Mr. Smith was appointed to the board of
directors of the Company on the same day the TCA Cable Partners partnership was
approved by the Company. See Note 5 to the "Consolidated Financial Statement."

In connection with the Offering of the Debentures, Chase Securities Inc.,
on behalf of the Underwriters, may engage in overallotment, stabilizing
transactions, and syndicate covering transactions in accordance with Regulation
M under the Securities and Exchange Act. Overallotment involves sales in excess
of the offering size, which creates a short position for the Underwriters.
Stabilizing transactions involve bids to purchase Debentures in the open market
for the purpose of pegging, fixing or maintaining the price of the Debentures.
Syndicate covering transactions involve purchases of the Debentures in the open
market after the distribution has been completed in order to cover short
positions. Such stabilizing transactions and syndicate covering transactions may
cause the price of the Debentures to be higher than it would otherwise be in the
absence of such transactions. Such actions, if commenced, may be discontinued at
any time.

S-40
<PAGE> 41

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGES
------------
<S> <C>
TCA CABLE TV, INC. AND SUBSIDIARIES FINANCIAL STATEMENTS
Report of Independent Accountants......................... F-2
Consolidated Balance Sheets as of October 31, 1997 and
1996................................................... F-3
Consolidated Statements of Operations for the years ended
October 31, 1997, 1996 and 1995........................ F-4
Consolidated Statements of Changes in Shareholders' Equity
for the years ended October 31, 1997, 1996 and 1995.... F-5
Consolidated Statements of Cash Flows for the years ended
October 31 1997, 1996 and 1995......................... F-6
Notes to Consolidated Financial Statements................ F-7 -- F-16
</TABLE>

F-1
<PAGE> 42

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Shareholders
TCA Cable TV, Inc.

We have audited the consolidated balance sheets of TCA Cable TV, Inc. and
Subsidiaries as of October 31, 1997 and 1996 and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for
each of the three years in the period ended October 31, 1997. 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 generally accepted auditing
standards. 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 TCA Cable TV,
Inc. and Subsidiaries as of October 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended October 31, 1997, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

Dallas, Texas
January 15, 1998

F-2
<PAGE> 43

TCA CABLE TV, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1997 AND 1996

ASSETS

<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Cash....................................................... $ 3,270,190 $ 3,473,443
Accounts receivable, subscribers........................... 15,852,757 12,408,291
Accounts receivable, other................................. 1,017,070 666,957
Income tax receivable...................................... 529,830 1,001,709
Notes receivable, affiliates............................... -- 80,000
Investments................................................ -- 4,714,629
Property, plant and equipment, at cost:
Land..................................................... 4,110,347 3,313,883
Distribution systems..................................... 380,864,913 340,766,176
Transportation equipment................................. 11,277,388 9,686,330
Other.................................................... 40,994,072 32,386,113
------------- -------------
437,246,720 386,152,502
Less accumulated depreciation............................ (208,416,640) (186,892,042)
------------- -------------
228,830,080 199,260,460
------------- -------------
Other assets:
Intangibles, net of accumulated amortization of
$98,669,961 and $84,660,150, respectively............. 464,602,414 441,189,861
Prepaid expenses and other assets........................ 7,029,979 1,201,281
------------- -------------
471,632,393 442,391,142
------------- -------------
$ 721,132,320 $ 663,996,631
============= =============

LIABILITIES

Accounts payable........................................... $ 12,047,781 $ 12,137,215
Accrued expenses........................................... 23,653,545 14,671,323
Subscriber advance payments................................ 3,522,240 4,909,936
Deferred income taxes...................................... 71,580,000 59,580,000
Term debt.................................................. 317,025,181 314,492,583
------------- -------------
427,828,747 405,791,057
------------- -------------
Redeemable minority interest............................... 122,636,878 111,873,245
Contingencies and commitments

SHAREHOLDERS' EQUITY

Preferred stock, $1.00 par value, 5,000,000 shares
authorized; none issued.................................. -- --
Common stock, $0.10 par value, 60,000,000 shares
authorized; 24,991,048 and 24,931,931 shares issued,
respectively............................................. 2,499,105 2,493,193
Additional paid in capital................................. 51,845,522 49,984,093
Retained earnings.......................................... 119,108,443 96,861,418
------------- -------------
173,453,070 149,338,704
Less treasury stock, at cost, 113,000 and 123,000 shares,
respectively............................................. (2,786,375) (3,006,375)
------------- -------------
170,666,695 146,332,329
------------- -------------
$ 721,132,320 $ 663,996,631
============= =============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-3
<PAGE> 44

TCA CABLE TV, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CATV revenues................................ $307,501,312 $253,308,282 $190,708,487
------------ ------------ ------------
Operating expenses:
Salaries, wages and benefits............... 56,489,396 43,581,967 32,814,442
Programming costs.......................... 81,010,410 61,792,409 43,713,752
Other operating expenses................... 10,307,048 8,443,728 6,641,685
Selling, general and administrative........ 23,817,927 19,978,765 13,374,093
Depreciation and amortization.............. 44,255,420 37,523,989 28,351,802
------------ ------------ ------------
215,880,201 171,320,858 124,895,774
------------ ------------ ------------
Operating income........................... 91,621,111 81,987,424 65,812,713
Other income................................. 389,768 332,891 353,221
Interest expense............................. (22,182,337) (21,932,562) (13,847,458)
Minority interest............................ (7,088,633) (3,248,245) --
------------ ------------ ------------
Income before income taxes................. 62,739,909 57,139,508 52,318,476
------------ ------------ ------------
Provisions for income taxes:
Current.................................... 12,600,000 10,800,000 12,849,000
Deferred................................... 12,000,000 11,400,000 8,180,000
------------ ------------ ------------
24,600,000 22,200,000 21,029,000
------------ ------------ ------------
Net income................................. $ 38,139,909 $ 34,939,508 $ 31,289,476
============ ============ ============
Earnings per common share.................... $ 1.53 $ 1.41 $ 1.27
============ ============ ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements

F-4
<PAGE> 45

TCA CABLE TV, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED OCTOBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
COMMON STOCK ISSUED ADDITIONAL
------------------------ PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK
----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 31, 1994................... $24,733,261 $2,473,326 $42,860,849 $ 56,266,488 $(2,703,754)
Net income................................ -- -- -- 31,289,476
Issuance of common stock.................. 21,336 2,134 551,267 -- --
Stock options exercised................... 27,524 2,752 292,872 -- --
Cash dividends at $.48 per share.......... -- -- -- (11,787,622) --
Treasury stock purchased.................. -- -- -- -- (1,100,000)
----------- ---------- ----------- ------------ -----------
BALANCE, OCTOBER 31, 1995................... 24,782,121 2,478,212 43,704,988 75,768,342 (3,803,754)
Net income................................ -- -- -- 34,939,508 --
Issuance of common stock in connection
with an acquisition..................... 106,839 10,684 5,285,562 -- 2,703,754
Other issuances of common stock........... 26,756 2,676 747,876 -- --
Stock options exercised................... 16,215 1,621 151,767 -- --
Amortization of warrants (Note 5)......... -- -- 93,900 -- --
Cash dividends at $.56 per share.......... -- -- -- (13,846,432) --
Treasury stock purchased.................. -- -- -- -- (1,906,375)
----------- ---------- ----------- ------------ -----------
BALANCE, OCTOBER 31, 1996................... 24,931,931 2,493,193 49,984,093 96,861,418 (3,006,375)
Net income................................ -- -- -- 38,139,909 --
Issuance of common stock in connection
with an acquisition..................... -- -- 160,000 -- 220,000
Other issuances of common stock........... 32,015 3,202 1,071,843 -- --
Stock options exercised................... 27,102 2,710 441,786 -- --
Amortization of warrants (Note 5)......... -- -- 187,800 -- --
Cash dividends at $.64 per share.......... -- -- -- (15,892,884) --
----------- ---------- ----------- ------------ -----------
BALANCE, OCTOBER 31, 1997................... $24,991,048 $2,499,105 $51,845,522 $119,108,443 $(2,786,375)
=========== ========== =========== ============ ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-5
<PAGE> 46

TCA CABLE TV, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED OCTOBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income................................. $ 38,139,909 $ 34,939,508 $ 31,289,476
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense.................... 30,193,797 25,464,954 20,883,186
Amortization expense.................... 14,061,623 12,059,035 7,468,616
Deferred income taxes................... 12,000,000 11,400,000 8,180,000
(Gain) loss on sale of assets........... 127,288 (72,497) (283,118)
Share of (earnings) losses of
affiliates............................ (366,235) 385,144 542,875
Minority interest in earnings........... 7,088,633 3,248,245 --
Employee stock bonus.................... 163,125 138,750 --
Stock warrant amortization.............. 187,800 93,900 --
Contribution of common stock to
retirement plan....................... 911,920 611,803 553,401
Change in prepaid expenses and other
assets................................ (706,624) 370,472 (433,164)
Change in accounts receivable,
subscribers........................... (3,444,466) (4,434,332) (3,060,247)
Change in accounts receivable, other.... (350,113) 212,311 (714,364)
Change in income tax
receivable/payable.................... 471,879 (69,403) (1,427,584)
Change in subscriber advance payments... (1,387,696) 1,053,574 117,049
Change in accrued expenses.............. 3,860,148 (524,001) 3,918,597
Change in accounts payable.............. (89,434) 5,640,808 1,139,045
------------ ------------ ------------
Net cash provided by operating
activities....................... 100,861,554 90,518,271 68,173,768
------------ ------------ ------------
Cash flows from investing activities:
Payments for purchases of companies and
CATV systems............................ (41,209,854) (78,108,502) (150,713,520)
Capital expenditures....................... (51,762,673) (45,902,219) (39,766,039)
Loan to affiliate.......................... -- -- (2,500,000)
Investment in affiliate.................... -- (1,000,000) --
Distributions from affiliates.............. 400,000 -- --
Proceeds from sales of assets.............. 748,510 150,510 1,090,992
------------ ------------ ------------
Net cash used in investing
activities....................... (91,824,017) (124,860,211) (191,888,567)
------------ ------------ ------------
Cash flows from financing activities:
Borrowings of term debt.................... 108,899,990 157,582,679 315,785,939
Repayments of term debt.................... (106,367,392) (105,303,151) (180,020,230)
Debt issuance costs........................ -- -- (643,750)
Treasury stock purchased................... -- (1,906,375) (1,100,000)
Proceeds from stock options exercised...... 444,496 153,388 295,624
Partnership capital contributions.......... 10,275,000 3,175,000 --
Partnership distributions.................. (6,600,000) (3,300,000) --
Dividends paid............................. (15,892,884) (13,846,432) (11,787,622)
------------ ------------ ------------
Net cash provided by (used in)
financing activities............. (9,240,790) 36,555,109 122,529,961
------------ ------------ ------------
Net increase (decrease) in cash.............. (203,253) 2,213,169 (1,184,838)
Cash at beginning of year.................... 3,473,443 1,260,274 2,445,112
------------ ------------ ------------
Cash at end of year.......................... $ 3,270,190 $ 3,473,443 $ 1,260,274
============ ============ ============
Supplemental Cash Flow Information:
Interest paid.............................. $ 22,459,853 $ 21,694,203 $ 13,246,011
============ ============ ============
Income taxes paid.......................... $ 10,376,712 $ 10,869,403 $ 14,276,584
============ ============ ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements

F-6
<PAGE> 47

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF FINANCIAL STATEMENT PRESENTATION:

TCA Cable TV, Inc. (the "Company" or "TCA") owns and operates cable
television ("CATV") systems in non-urban areas in Arkansas, Idaho, Louisiana,
Mississippi, New Mexico, Oklahoma and Texas. The consolidated financial
statements include the accounts of TAL Financial Corporation ("TAL"), a
wholly-owned subsidiary of the Company, and TAL's directly and indirectly,
wholly-owned subsidiaries: TCA Management Company; Teleservice Corporation of
America; Texas Community Antennas, Inc.; Texas Telecable, Inc.; TCA Cable of
Amarillo, Inc.; Telecable Associates, Inc.; Sun Valley Cablevision, Inc.; VPI
Communications, Inc.; TCA Communications, Inc., M.T. Associates, Inc., TCA
Interests, L.L.C., TCA Holdings, L.P., TCA Interests II, Inc., and TCA Holdings
II, L.P. The consolidated financial statements also include the accounts of TCA
Cable Partners, a partnership that is owned 75% by TCA and 25% by DR Partners, a
division of Stephens Group, Inc.

All significant intercompany transactions have been eliminated in
consolidation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Property, Plant and Equipment:

Depreciation of property, plant and equipment is computed using the
straight-line method over the estimated useful lives of the related assets as
follows:

<TABLE>
<S> <C>
Distribution systems........................................ 5-15 years
Transportation equipment.................................... 5 years
Other....................................................... 5-32 years
</TABLE>

Maintenance and repair costs are charged to expense as incurred. Major
replacements and betterments are capitalized. Upon sale or retirement, the cost
and accumulated depreciation applicable to the asset is removed from the
accounts and the resulting profit or loss is reflected in income.

Income Taxes:

The Company and its subsidiaries file a consolidated federal income tax
return. The Company utilizes an asset and liability approach for financial
accounting and reporting for income taxes in accordance with Statement on
Financial Accounting Standards No. 109, "Accounting for Income Taxes."

Intangibles:

Intangible assets including franchises, non-compete agreements and goodwill
are recorded at cost. Intangible assets are amortized on a straight-line basis
over the expected useful lives of the assets, which range from 5 to 40 years.

Goodwill represents the excess of the cost of the acquisition over the fair
value of the net assets acquired and is being amortized on a straight-line basis
over 40 years. At each balance sheet date, management assesses whether there has
been a permanent impairment in the value of goodwill by considering current
operating results, estimated non discounted future cash flows, trends and
prospects.

F-7
<PAGE> 48

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Investments:

Investments in affiliates in which the Company's voting interest is 20% to
50% are accounted for under the equity method. Under this method, the
investment, originally recorded at cost, is adjusted to recognize the Company's
share of the net earnings or losses of the affiliates as they occur rather than
as dividends or other distributions are received. The Company's share of the
results of operations of affiliates is not material. During 1996, the Company
converted $2,420,000 of notes receivable from affiliates to investments in
affiliates.

Reclassifications:

Certain reclassifications have been made to the prior years' financial
statements to conform to the current year presentation.

Concentration of Credit Risk:

The Company maintains cash balances at several financial institutions.
During the year, these balances may exceed federally insured amounts.

3. INTANGIBLE ASSETS:

Intangible assets consists of the following:

<TABLE>
<CAPTION>
OCTOBER 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Covenants not to compete.............................. $ 38,046,463 $ 37,911,423
Franchises............................................ 145,192,565 145,192,565
Goodwill.............................................. 380,033,347 342,746,023
------------ ------------
563,272,375 525,850,011
Less: Accumulated amortization........................ (98,669,961) (84,660,150)
------------ ------------
$464,602,414 $441,189,861
============ ============
</TABLE>

4. TERM DEBT:

Term debt consists of the following:

<TABLE>
<CAPTION>
OCTOBER 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Notes payable to three companies payable in semiannual
installments beginning February 1993, due August
1999, bearing interest at 9.0%...................... $ 24,000,000 $ 36,000,000
Notes payable to five insurance companies payable in
annual installments beginning June 1999, due June
2005, bearing interest at 7.26%..................... 100,000,000 100,000,000
Revolving bank credit, terminating June 30, 2002, with
16 quarterly commitment reductions commencing
September 1998, with interest at prime or LIBOR plus
an applicable margin, unused portion of $30,000,000
and $45,000,000 as of October 31, 1997 and 1996,
respectively, with a commitment fee of 1/4% per
annum on the unused portion(a)...................... 170,000,000 155,000,000
</TABLE>

F-8
<PAGE> 49

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
OCTOBER 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revolving bank credit, terminating June 1998, with
interest at prime or LIBOR plus an applicable
margin, unused portion of $2,000,000 and $2,500,000
as of October 31, 1997 and 1996, respectively, with
no commitment fees(a)............................... 23,000,000 22,500,000
Other................................................. 25,181 992,583
------------ ------------
$317,025,181 $314,492,583
============ ============
</TABLE>

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

(a) The weighted average interest rate on the Company's revolving bank credit at
October 31, 1997 and 1996 was 6.39% and 6.18%, respectively.

The Company's revolving bank credit agreements and the term loan agreements
contain restrictive covenants including minimum cash flow ratios. Under these
covenants, the Company's dividends, capital expenditures and fixed principal
payments could also be limited.

Scheduled maturities of term debt at October 31, 1997, are as follows:

<TABLE>
<S> <C>
1998........................................................ $ 35,008,989
1999........................................................ 58,795,642
2000........................................................ 64,291,978
2001........................................................ 64,285,714
2002........................................................ 51,785,714
Thereafter.................................................. 42,857,144
------------
$317,025,181
============
</TABLE>

On July 24, 1997, the Company filed a shelf registration with the SEC for a
public debt offering of up to $300 million. The Company plans to issue $150
million in public debt in February, 1998 to finance the TCI Transaction (see
Note 17). In connection with this contemplated debt offering, the Company
entered into treasury lock transactions with a notional amount totaling $100
million in August 1997 (the "Treasury Locks"). The Treasury Locks are designated
as a hedge against future interest rate changes prior to the anticipated closing
of the contemplated debt offering. At October 31, 1997, the Company's liability
associated with the Treasury Locks approximated $5.1 million as a result of
declining interest rates. The offset to this liability, which is included in
accrued expenses in the accompanying consolidated balance sheet, has been
capitalized in prepaid expenses and other assets in the accompanying
consolidated balance sheet. In January 1998, the Treasury Locks were terminated
at a cost of $7.9 million. The cost will be amortized over the term of the
public debt as an interest rate yield adjustment. If plans for issuance of the
public debt are terminated, the deferred Treasury Locks termination cost of $7.9
million will be charged to expense.

5. TRANSACTIONS WITH AFFILIATES:

TCA Management Company performs all accounting and management services for
two CATV systems owned by affiliated companies (the "affiliated companies").
Revenues received by TCA Management Company from the affiliated companies (which
equal an expense reimbursement plus a profit) are included in CATV revenues and
related expenses are included in operating expenses. These amounts are not
material.

F-9
<PAGE> 50

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company leases its headquarters building from a company partially owned
by the estate of Mr. Robert M. Rogers, a former officer and director of TCA, and
his former wife, Louise Rogers. The annual lease expense was $318,515 for 1997,
1996 and 1995.

The Company purchased distribution system construction services from a
partnership partially owned by a director of the Company. During 1997, 1996 and
1995, transactions with the partnership totaled $7,894,454, $7,572,130 and
$4,603,694, all of which were capitalized. Effective June 1, 1997, this
partnership was merged with a corporation 100% owned by the Company.

On December 31, 1996, TCA Communications Inc. ("TCAC"), a 50% owned
affiliate of the Company, distributed certain assets of TCAC primarily related
to its long distance operations and Internet operations in East Texas to
Lufkin-Conroe Telecommunications Corporation ("LCT") in exchange for LCT's 50%
ownership interest in TCAC. Effective January 1, 1997, TCAC became a
wholly-owned subsidiary of TCA which provides long distance and Internet
services in West Texas, New Mexico, and Arkansas.

On May 1, 1996, the Company issued warrants to purchase 300,000 shares of
TCA Common Stock at $30 per share to Stephens Group, Inc. (see Note 9) in
exchange for financial advisory services to be provided over a ten year period.
The warrants were valued at $1,878,000 at the issuance date using the
Black-Scholes pricing model. Fifty percent of the warrants are exercisable five
years from the date of issuance and the remaining 50% are exercisable ten years
from the date of issuance. The value assigned to the warrants is being amortized
over a ten year period with a corresponding increase in additional paid-in
capital.

6. CONTINGENCIES AND COMMITMENTS:

Annual rental expense for utility poles and tower sites for the years ended
October 31, 1997, 1996 and 1995 was approximately $2,292,000, $2,112,000 and
$1,434,000, respectively.

Rental expense for all rental agreements for the years ended October 31,
1997, 1996 and 1995 was approximately $3,817,000, $3,216,000, and $2,316,000,
respectively.

Various lawsuits are pending against the Company and its subsidiaries. The
Company intends to vigorously contest the liability in all matters brought
against the Company. While no assurance can be given as to the ultimate outcome,
management believes the litigation will not have a material adverse effect on
the results of operations or financial position of the Company

7. INCOME TAXES:

The following is a reconciliation of taxes computed at the statutory
federal income tax rate with the provision for income taxes in the consolidated
financial statements for each of the three years in the period ended October 31:

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Income before taxes...................... $62,739,909 $57,139,508 $52,318,476
=========== =========== ===========
Statutory federal rate................... 35.0% 35.0% 35.0%
Provision for federal income taxes at the
statutory federal rate................. $21,958,968 $19,998,828 $18,311,467
State income taxes....................... 2,138,966 1,988,949 2,671,414
Amortization of goodwill................. 236,605 184,610 272,654
Other.................................... 265,461 27,613 (226,535)
----------- ----------- -----------
Provision for income taxes............... $24,600,000 $22,200,000 $21,029,000
=========== =========== ===========
</TABLE>

F-10
<PAGE> 51

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The deferred income taxes liability balance of $71,580,000 and $59,580,000
at October 31, 1997 and 1996, respectively, is the tax effect of temporary
differences between the tax bases of the Company's property, plant and equipment
and intangibles and their bases for financial reporting purposes. The Company
does not have any other material temporary differences necessitating a provision
for deferred income taxes.

8. EARNINGS PER COMMON SHARE:

Earnings per common share are computed using the weighted average number of
shares outstanding during the period, including Common Stock equivalents:
24,916,576 shares for 1997, 24,748,980 shares for 1996, and 24,582,447 shares
for 1995.

9. SALES AND ACQUISITIONS:

On April 2, 1997 the Company acquired the assets of the cable television
system serving approximately 21,000 subscribers in Jonesboro, Arkansas and
surrounding areas. The acquisition was made through TCA Cable Partners, the TCA
managed partnership with DR Partners ("Donrey"), a division of Stephens Group,
Inc. The system was acquired from East Arkansas Cablevision, Inc. The cost of
the acquisition was approximately $41 million, $35 million of which related to
acquired intangibles. The acquisition was funded by the Company's bank line of
credit and a capital contribution of $10.3 million by Donrey.

Effective June 1, 1997, the Company acquired the remaining 60% of its
previously 40% owned affiliates M.T. Associates, Inc. ("Media") and Media
Technologies, Ltd. ("Media Tech"). The cost of the acquisition was $932,000.
Media is a wholly-owned subsidiary of the Company engaged in the construction of
cable television plant. All of Media's revenue for 1997 was derived from
distribution system construction services provided to the Company.

On October 2, 1996, the Company, through TCA Cable Partners, completed an
asset exchange with Communications Services, Inc. ("CSI"), a wholly-owned
subsidiary of TCI Communications, Inc. TCA Cable Partners acquired the cable
television system operating in Ft. Smith, Arkansas and surrounding areas in
exchange for its Vallejo, California system.

On September 11, 1996, the Company, through TCA Cable Partners, purchased
the assets of the cable television system serving approximately 8,100
subscribers in Van Buren, Alma and Barling, Arkansas. The system was acquired
from subsidiaries of Classic Cable, Inc. The cost of the acquisition was
approximately $12.7 million, $10 million of which relates to acquired
intangibles. The system is managed by the Company's Ft. Smith, Arkansas system.
The acquisition was funded by the Company's bank line of credit.

On May 1, 1996, TCA acquired five additional cable television systems
through TCA Cable Partners, a partnership which is owned 75% by TCA and 25% by
Donrey and is managed by TCA. The partnership was originally comprised of 22
systems in Arkansas and Mississippi contributed by TCA and five systems in
Arkansas, Oklahoma and California contributed by Donrey. The partnership served
approximately 240,000 subscribers at closing.

The acquisition of the Donrey systems in exchange for a 25% interest in the
partnership was valued at $109 million, $94 million of which related to acquired
intangibles. The value of the Donrey systems was recorded as redeemable minority
interest at the acquisition date, as Donrey has the right to require TCA to
purchase their 25% partnership interest at fair market value in January 2004.
TCA has a corresponding right to require Donrey to sell their 25% partnership
interest to TCA at fair market value in January 2004. The estimated fair market
value of the redeemable minority interest did not exceed the related carrying
value for financial reporting purposes as of October 31, 1997. In
F-11
<PAGE> 52

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accordance with the partnership agreement, free cash flow, as defined, will be
distributed to the partners in each year. Total partnership distributions for
fiscal 1997 and 1996 were $26.4 million and $13.2 million, respectively, of
which $6.6 million and $3.3 million was distributed to Donrey during 1997 and
1996, respectively.

Also on May 1, 1996, the Company acquired Cable One Corporation ("Cable
One"), a cable television advertising sales company based in Williamsport,
Pennsylvania. Cable One represents approximately 200 cable television systems
serving approximately 1.2 million subscribers primarily in the Northeastern
United States. The Company issued 266,667 shares of its Common Stock (159,828
shares of which were issued from treasury), valued at $8 million at the
acquisition date, for 100% of the stock of Cable One. Acquired intangibles
accounted for approximately $6 million of the $8 million purchase price. The
Company also paid $1.8 million for a non-compete agreement. Cable One is managed
by TCA's advertising sales subsidiary VPI Communications, Inc. d/b/a CableTime.

On December 15, 1995, the Company acquired the assets of the cable
television system serving approximately 29,000 subscribers in Alexandria and
Pineville, Louisiana ("Alexandria"). TCA acquired the assets of cable television
systems in North Carolina and South Carolina from Star Cable Associates and
simultaneously exchanged them with Time Warner Entertainment -- Advance/Newhouse
Partnership for Alexandria. The cost of the acquisition was approximately $63
million, $54.9 million of which relates to acquired intangibles. The acquisition
was funded by the Company's bank line of credit.

On August 1, 1995, the Company, through a subsidiary, purchased the assets
related to the operation of the cable television system serving approximately
10,000 subscribers in the city of El Dorado, Arkansas from Time Warner Cable
Ventures, a division of Time Warner Entertainment, L.P. The purchase price was
approximately $19 million, $15.4 million of which relates to acquired
intangibles.

On July 1, 1995, the Company, through a subsidiary, acquired substantially
all of the assets used by Marcus Cable of San Angelo, L.P. in the operation of
the cable television systems serving approximately 28,000 subscribers in and
around the following cities, counties, and areas in Texas: San Angelo, Andrews,
Ballinger, Miles, Winters, Goodfellow Air Force Training Center, Andrews County,
and Tom Green County. The cost of the acquisition was approximately $66 million,
$57.8 million of which relates to acquired intangibles.

In May 1995, the Company, through its subsidiaries, acquired substantially
all of the assets used by Time Warner Entertainment Company, L.P. in the
operation of the cable television systems serving approximately 34,000
subscribers in and around the following cities in Arkansas: Fayetteville,
Elkins, Farmington, Greenland, Russellville, Clarksville, Booneville,
Pottsville, Paris, and the unincorporated areas within the counties in which the
foregoing cities are located. The cost of the acquisition was approximately $66
million, $56.4 million of which relates to acquired intangibles.

These acquisitions were accounted for as purchases, and accordingly,
results of operations of the acquired assets have been included in the
consolidated financial statements from the dates of acquisition.

10. INCENTIVE STOCK OPTION PLAN:

The Company, in fiscal years 1997 and 1996, granted stock options and
issued shares of restricted Common Stock under the TCA Cable TV, Inc. Amended
and Restated Incentive Stock Option Plan and the 1996 Non-Employee Directors'
Stock Option Plan (collectively the "Plan"). The Company applies APB Opinion No.
25 and related interpretations in accounting for the Plan. In 1995,
F-12
<PAGE> 53

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). Companies may continue to apply the provisions of APB Opinion No. 25 in
determining net income; however, they must apply the disclosure requirements of
SFAS 123 for all grants issued after fiscal 1995. The Company elected to
continue to apply the provisions of APB Opinion No. 25 in accounting for all
grants.

The Company granted stock options in fiscal 1997 and 1996 to employees and
directors. All of the options granted to the employees and directors have an
exercise price equal to or greater than the fair market value of the stock at
grant date and become exercisable beginning on the first anniversary of the date
of grant. The options granted to non-employee directors have a contractual term
of 10 years and vest immediately on the date of grant. The options granted to
employees have a contractual term of 7 years and vest over four years at the
rate of 25% per year beginning on the first anniversary date of the grant.

A summary of the Company's stock options as of October 31, 1997, 1996 and
1995, and the changes during the years ended on those dates is presented below:

<TABLE>
<CAPTION>
STOCK OPTIONS
-------------------------------------------------------------
1997 1996 1995
---------------------- ---------------------- -----------
WEIGHTED WEIGHTED
# OF SHARES AVERAGE # OF SHARES AVERAGE # OF SHARES
UNDERLYING EXERCISE UNDERLYING EXERCISE UNDERLYING
OPTIONS PRICES OPTIONS PRICES OPTIONS
----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
Outstanding at beginning of the
year............................... 217,250 $25.05 178,359 $22.93 152,206
Granted.............................. 72,000 30.34 67,500 28.09 66,900
Exercised............................ (44,428) 23.58 (28,609) 19.01 (40,747)
Forfeited............................ -- -- -- -- --
Expired.............................. -- -- -- -- --
------- ------ ------- ------ --------
Outstanding at end of year........... 244,822 $26.87 217,250 $25.05 178,359
======= ====== ======= ====== ========
Exercisable at end of year........... 121,922 26.56 63,200 22.88 51,034
======= ====== ======= ====== ========
Weighted-average fair value of
options granted.................... -- $ 6.92 $ 6.29 --
====== ======
</TABLE>

The fair value of each stock option granted is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions for grants in fiscal 1997 and 1996: dividend yield
of 2.22%; risk free interest rate 5.82%; expected life of 4.5 years; and a
volatility of 22.8%.

Options outstanding as of October 31, 1997 have exercise prices ranging
from $20.75 to $31.13 and weighted average remaining term of 4.75 years.

Had the compensation cost for the Company's stock-based compensation plans
been determined consistent with the requirements of SFAS 123, the Company's net
income and net income per common share for 1997 and 1996 would approximate the
pro forma amounts below:

<TABLE>
<CAPTION>
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
10/31/97 10/31/97 10/31/96 10/31/96
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SFAS 123 Charge.......... -- $ 448,452 -- $ 94,000
APB 25 Charge............ -- -- -- --
Net income............... $38,139,909 $37,869,099 $34,939,508 $34,845,508
Net Income Per Common
Share.................. $ 1.53 $ 1.52 $ 1.41 $ 1.41
</TABLE>

F-13
<PAGE> 54

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards granted prior to
the 1996 fiscal year.

11. DEFERRED SAVINGS AND RETIREMENT PLAN:

Effective September 1, 1983, the Company and several of its affiliates
adopted a deferred savings and retirement plan covering all employees with at
least one year of service.

Employees may elect to contribute a portion of their compensation to the
plan. The Company may contribute up to an amount equal to the employees'
contributions but not in excess of three percent of the employees' earnings. The
Company anticipates that all or substantially all of their discretionary and
matching contributions will consist of registered shares of Common Stock of the
Company. The Company's contributions for the years ended October 31, 1997, 1996
and 1995 were $911,920, $611,803 and $553,401, respectively.

12. UNCERTAINTIES AND USE OF ESTIMATES

The Telecommunications Act of 1996 was signed into law on February 8, 1996.
This new law alters the regulatory structure governing the nation's
telecommunications providers. It removes barriers to competition in both the
cable television market and the local telephone market. Among other things, it
reduces the scope of cable regulation. The Company's management believes this
legislation may have a significant impact on its operations and its competitive
environment.

Use of Estimates:

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

13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------
JANUARY 31 APRIL 30 JULY 31 OCTOBER 31
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenues:
1997............................ $73,489,288 $74,983,934 $79,181,508 $79,846,582
1996............................ 55,000,233 57,577,680 69,399,627 71,330,742
Operating income:
1997............................ 22,813,374 21,914,993 23,479,678 23,413,066
1996............................ 19,363,883 19,439,800 21,755,887 21,427,854
Net income:
1997............................ 9,686,768 9,200,564 9,484,822 9,767,755
1996............................ 8,488,375 8,960,299 8,609,313 8,881,521
Earnings per common share:
1997............................ $ 0.39 $ 0.37 $ 0.38 $ 0.39
1996............................ $ 0.34 $ 0.36 $ 0.35 $ 0.36
</TABLE>

F-14
<PAGE> 55

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. SEGMENT INFORMATION:

The Company operates primarily in the cable television industry. The
Company's wholly-owned subsidiary, VPI Communications, Inc. d/b/a CableTime,
provides cable advertising sales for the Company and third parties.

<TABLE>
<CAPTION>
ADVERTISING
CABLE INSERTION CONSOLIDATED
------------ ----------- ------------
<S> <C> <C> <C>
YEAR ENDED OCTOBER 31, 1997
Revenues............................. $253,812,951 $53,688,361 $307,501,312
Operating income..................... 84,718,185 6,902,926 91,621,111
Depreciation and amortization........ 42,280,074 1,975,346 44,255,420
Capital expenditures, including
acquisitions...................... 58,339,790 3,410,114 61,749,904
Identifiable assets.................. 689,127,318 32,005,002 721,132,320
YEAR ENDED OCTOBER 31, 1996
Revenues............................. $218,385,752 $34,922,530 $253,308,282
Operating income..................... 75,899,140 6,088,284 81,987,424
Depreciation and amortization........ 36,255,472 1,268,517 37,523,989
Capital expenditures, including
acquisitions...................... 68,631,042 4,931,924 73,562,966
Identifiable assets.................. 635,971,570 28,025,061 663,996,631
YEAR ENDED OCTOBER 31, 1995
Revenues............................. $172,821,258 $17,887,229 $190,708,487
Operating income..................... 61,493,755 4,318,958 65,812,713
Depreciation and amortization........ 27,350,376 1,001,426 28,351,802
Capital expenditures, including
acquisitions...................... 60,105,585 802,930 60,908,515
Identifiable assets.................. 441,618,510 12,470,426 454,088,936
</TABLE>

15. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The carrying amount of the Company's term debt approximates fair value as
the interest rates on the significant components of such debt approximate
market.

16. IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

Earnings Per Share (SFAS 128)

The Company will adopt Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS 128"), during the fiscal year ending October 31,
1998. SFAS 128 established simplified accounting standards for computing
earnings per share and makes them comparable to international earnings per share
standards. If SFAS 128 had been applied during 1997, the Company's basic and
diluted earnings per share would have been $1.54 and $1.53, respectively.

Disclosure of Information about Capital Structure (SFAS 129)

F-15
<PAGE> 56

TCA CABLE TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Reporting Comprehensive Income (SFAS 130)

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income," which
is effective for fiscal years beginning after December 15, 1997. This statement
establishes standards for reporting and display of comprehensive income and its
components.

Disclosures about Segments of an Enterprise and Related Information (SFAS 131)

17. SUBSEQUENT EVENTS:

On November 13, 1997, the Company signed an agreement with TCI American
Cable Holdings IV, L.P. (the "TCI Affiliate"), an affiliate of
Tele-Communications, Inc., to establish a partnership involving cable systems in
several communities in Texas, Louisiana, and New Mexico (the "TCI Transaction").
The Company will contribute selected systems in Texas and New Mexico, serving
approximately 155,000 customers, and approximately $46.6 million in debt to the
partnership. The TCI Affiliate will contribute its cable systems in mid-Texas
and western Louisiana, serving approximately 150,000 customers, and
approximately $247.9 million in debt to the partnership. The systems to be
contributed by the Company and the TCI Affiliate are each valued at $315
million. The TCI Affiliate will hold a 20 percent interest in the partnership.
The Company will hold an 80 percent interest and will be the managing partner
for the venture. TCA will consolidate the partnership for financial statement
purposes. The TCI Transaction is projected to close in February 1998.

On December 15, 1997, the Company sold the assets of its long distance
business to NTS Communications, Inc. The sales price was $4.1 million resulting
in a gain of approximately $0.7 million.

At the December 17, 1997 Board of Directors' Meeting, a cash dividend of
$0.16 was declared. This dividend is to holders of record on January 6, 1998,
and payable on January 20, 1998.

On January 15, 1998, the Company's Board of Directors adopted a Shareholder
Rights Plan (the "Rights Plan"). In connection with the adoption of the Rights
Plan, the Board declared a dividend of one preferred share purchase right for
each outstanding share of Company Common Stock. Each Right, which is not
presently exercisable, entitles the holder to purchase one one-thousandth of a
share of Series A Junior Participating Preferred Stock at an exercise price of
$170. In the event that any person acquires 15 percent or more of the
outstanding shares of Common Stock, each holder of a Right (other than the
acquiring person or group) will be entitled to receive, upon payment of the
exercise price, that number of Common Stock having a market value equal to two
times the exercise price. The distribution of the Rights will be made on January
28, 1998, payable to shareholders of record at the close of business on that
date. The Rights will expire on January 15, 2008.

F-16
<PAGE> 57

PROSPECTUS

TCA CABLE TV, INC.
$300,000,000
DEBT SECURITIES

TCA Cable TV, Inc. ("TCA" or the "Company"), a Texas corporation, may offer
and sell from time to time its debt securities (the "Debt Securities"), on terms
to be determined at the time of sale, through dealers, underwriters or agents to
be designated, or directly to other purchasers, at an aggregate initial offering
price not exceeding $300,000,000. The Debt Securities may be offered as separate
series with the same or various maturities. The specific designation, aggregate
principal amount, denominations, maturity, premium, if any, terms for any
sinking fund payments, the initial public offering price, the net proceeds to
the Company and any other specific terms in connection with the offering and
sale of the Debt Securities in respect of which this Prospectus is being
delivered are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement").

Unless otherwise specified in an accompanying Prospectus Supplement, the
Debt Securities will be senior securities of the Company, ranking equally with
all other unsubordinated and unsecured indebtedness of the Company.

The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement, including, where applicable, the specific designation, aggregate
principal amount, currency, denomination, maturity (which may be fixed or
extendible), priority, interest rate or rates (or manner of calculation
thereof), if any, time of payment of interest, if any, terms for any redemption
or repayment at the option of the Company or the holder or for any sinking fund
payments, terms for any conversion or exchange (including the terms relating to
the adjustment thereof), the initial public offering price and any other
specific terms of such Debt Securities.

The Prospectus Supplement will also contain information, where applicable,
about certain United States Federal income tax considerations relating to, and
any listing on a securities exchange of, the Debt Securities covered by the
Prospectus Supplement.

The Debt Securities may be issued only in registered form, including in the
form of one or more global securities ("Global Securities"), unless otherwise
set forth in the Prospectus Supplement.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

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

The Debt Securities may be offered directly, through agents designated from
time to time or through dealers or underwriters. If any agents of the Company or
any dealers or underwriters are involved in the offering of the Debt Securities
in respect of which this Prospectus is being delivered, the names of such
agents, dealers or underwriters and any applicable commissions or discounts will
be set forth in the Prospectus Supplement. The net proceeds to the Company from
such sale will also be set forth in the Prospectus Supplement.

THE DATE OF THIS PROSPECTUS IS AUGUST 1, 1997.
<PAGE> 58

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549; at the Commission's Chicago Regional office located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and at the Commission's New York Regional office located at 7 World
Trade Center, Room 1300, New York, New York 10048. Copies of such material may
also be obtained at prescribed rates from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549. Additionally, the Commission maintains a website
(http://www.sec.gov) that contains reports, proxy statements and information
statements and other information regarding registrants that file electronically
with the Commission. The Common Stock is listed on the Nasdaq National Market
System ("Nasdaq"). Reports, proxy statements and other information concerning
the Company can be inspected at the offices of Nasdaq.

The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933 (the "Securities Act") in connection with the offer and
sale of the Debt Securities offered hereby under the Securities Act. This
Prospectus does not contain all of the information set forth or incorporated by
reference in the Registration Statement and the exhibits thereto. For further
information with respect to the Company and the Debt Securities, reference is
made to the Registration Statement and the exhibits thereto. Copies of the
Registration Statement are available from the Commission. Statements contained
in this Prospectus concerning the provisions of documents filed with the
Registration Statement are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.

The Company's principal executive offices are located at 3015 S.S.E. Loop
323, Tyler, Texas 75701 and its telephone number is (903) 595-3701.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed with the Commission by the
Company, are incorporated herein by reference and made a part hereof:

(i) Annual Report of the Company on Form 10-K for the year ended October
31, 1996;

(ii) Quarterly Report of the Company on Form 10-Q for the quarter ended
January 31, 1997;

(iii) Quarterly Report of the Company on Form 10-Q for the quarter ended
April 30, 1997; and

(iv) Current Report on Form 8-K dated June 20, 1997.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Debt Securities to be made
hereunder shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein (or in the applicable Prospectus
Supplement) or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

2
<PAGE> 59

The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference in such documents). Written or telephone requests for such documents
should be directed to Karen L. Garrett, 3015 S.S.E. Loop 323, Tyler, Texas
75701, telephone: (903) 595-3701.

THE COMPANY

TCA Cable TV, Inc. is the sixteenth largest cable television system
operator in the United States and presently owns or manages 64 cable television
systems primarily in Texas, Louisiana and Arkansas. The Company also owns VPI
Communications, Inc., the largest third party turnkey advertising insert
provider for cable operators in the United States.

The Company was organized as a Texas corporation in December 1981 to
consolidate the ownership of four corporations which had been developing and
operating cable systems since 1965, 1973, 1975 and 1976, respectively. The
Company became publicly owned in 1982. The principal executive offices of the
Company are located at 3015 S.S.E. Loop 323, Tyler, Texas 75701 and the
telephone number is (903) 595-3701.

USE OF PROCEEDS

Except as may otherwise be set forth in the Prospectus Supplement, the net
proceeds from the sale of the Debt Securities may be used for general corporate
purposes, including to repay outstanding indebtedness of the Company, and to
fund potential future acquisitions or stock repurchases. Pending such
application of the proceeds, the Company will invest the proceeds from the sale
of the Debt Securities in certificates of deposit, United States government
securities or certain other interest bearing securities.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of earnings to fixed charges for
the Company and its subsidiaries for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED -------------------------------------
APRIL 30, 1997 1996 1995 1994 1993 1992
-------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges(1):.................. 3.80x 3.58x 4.74x 4.80x 4.01x 2.84x
</TABLE>

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

(1) The ratio of earnings to fixed charges have been computed by dividing fixed
charges into the sum of income before income taxes and the cumulative effect
of a change in accounting principle with adjustments to appropriately
reflect the Company's share of earnings and losses incurred by 50% owned
affiliates accounted for under the equity method and fixed charges. Fixed
charges consist of interest on all indebtedness and the interest component
of operating rents.

3
<PAGE> 60

HOLDING COMPANY STRUCTURE

The Company is a holding company and its assets consist primarily of
investments in its subsidiaries and majority-owned partnerships. The Company's
rights and the rights of its creditors, including holders of Debt Securities, to
participate in the distribution of assets of any person in which the Company
owns an equity interest (including any subsidiary and majority-owned
partnerships) upon such person's liquidation or reorganization will be subject
to prior claims of such person's creditors, including trade creditors, except to
the extent that the Company may itself be a creditor with recognized claims
against such person (in which case the claims of the Company would still be
subject to the prior claims of any secured creditor or such person and of any
holder of indebtedness of such person that is senior to that held by the
Company). Accordingly, the holder of Debt Securities may be deemed to be
effectively subordinated to such claims.

DESCRIPTION OF DEBT SECURITIES

GENERAL

The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of any Debt Securities
and the extent, if any, to which such general provisions will not apply to such
Debt Securities will be described in the Prospectus Supplement relating to such
Debt Securities.

The Debt Securities will be issued from time to time in series under an
Indenture to be entered into (the "Indenture"), between the Company and Texas
Commerce Bank National Association, as Trustee (the "Trustee"). The statements
set forth below are brief summaries of certain provisions contained in the
Indenture, which summaries do not purport to be complete and are qualified in
their entirety by reference to the Indenture, a copy of which is an exhibit to
the Registration Statement of which this Prospectus is a part. Numerical
references in parentheses below are to articles or sections of the Indenture.
Wherever defined terms are used but not defined herein, such terms shall have
the meanings assigned to them in the Indenture, it being intended that such
referenced articles and sections of the Indenture and such defined terms shall
be incorporated herein by reference.

The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and Debt Securities may be issued thereunder up to the
aggregate principal amount which may be authorized from time to time by the
Company. Any such limit applicable to a particular series will be specified in
the Prospectus Supplement relating to that series.

Reference is made to the Prospectus Supplement for the following terms of
each series of Debt Securities in respect to which this Prospectus is being
delivered: (i) the designation, date, aggregate principal amount, currency or
currency unit of payment and authorized denominations of such Debt Securities;
(ii) initial public offering price or prices of the Debt Securities and any
discounts or commissions paid to underwriters, dealers or agents in connection
therewith; (iii) the date or dates on which such Debt Securities will mature
(which may be fixed or extendible); (iv) the rate or rates (or manner of
calculation thereof), if any, per annum at which such Debt Securities will bear
interest; (v) the dates, if any, on which such interest will be payable; (vi)
the terms of any mandatory or optional redemption (including any sinking,
purchase or analogous fund) and any purchase at the option of holders (including
any sinking, purchase or analogous fund) and any purchase at the option of
holders; (vii) whether such Debt Securities are to be issued in the form of
Global Securities and, if so, the identity of the Depository with respect to
such Global Securities; and (viii) any other specific terms.

Unless otherwise set forth in the Prospectus Supplement, interest on
outstanding Debt Securities will be paid to holders of record on the date which
is 15 days immediately prior to the date such interest is to be paid. Unless
otherwise specified in the Prospectus Supplement, Debt

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Securities will be issued in fully registered form only and in denominations of
$1,000 and integral multiples thereof. Unless otherwise specified in the
Prospectus Supplement, the principal amount of the Debt Securities will be
payable at the corporate trust office of the Trustee in New York, New York. The
Debt Securities may be presented for transfer or exchange at such office unless
otherwise specified in the Prospectus Supplement, subject to the limitations
provided in the Indenture, without any service charge, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charges payable in connection therewith. (Section 305)

RANKING

Unless otherwise specified in a Prospectus Supplement for a particular
series of Debt Securities, all series of Debt Securities will be senior
indebtedness of the Company and will be direct, unsecured obligations of the
Company, ranking on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Company is a holding company and the Debt
Securities will be effectively subordinated to all existing and future
liabilities, including indebtedness, of the Company's subsidiaries. See "Holding
Company Structure."

COVENANTS

Limitation on Subsidiary Debt. The Company shall not permit any Subsidiary
of the Company to Incur or suffer to exist any Debt or issue any Preferred Stock
except: (i) Debt or Preferred Stock outstanding on the date of the original
issuance of the Debt Securities after giving effect to the application of the
proceeds from the Debt Securities; (ii) interest rate swap or similar agreements
and foreign currency hedge, exchange or similar agreements designed to provide
protection against fluctuations in interest rates and currency exchange rates,
respectively, provided that such agreements are entered into in, or are
incidental to, the ordinary course of business or are entered into in connection
with the incurrence of Debt permitted hereunder; (iii) Debt Incurred pursuant to
industrial revenue or development bonds in an aggregate principal amount not to
exceed $5 million at any one time outstanding; (iv) Debt Incurred or Incurrable
in respect of trade letters of credit, bankers' acceptances, performance or
return-of-money bonds or other obligations of a like nature Incurred in the
ordinary course of business; (v) Debt or Preferred Stock issued to and held by
the Company or a Wholly Owned Subsidiary of the Company, but only so long as
held or owned by the Company or a Wholly Owned Subsidiary of the Company; (vi)
Debt Incurred or Preferred Stock issued by a Person prior to the time (A) such
Person became a Subsidiary of the Company, (B) such Person merges into or
consolidates with a Subsidiary of the Company (provided that such Debt is not
Guaranteed by the Company) or (C) another Subsidiary of the Company merges into
or consolidates with such Person (in a transaction in which such Person becomes
a Subsidiary of the Company), which Debt or Preferred Stock was not Incurred or
issued in anticipation of such transaction (provided that such Debt is not
Guaranteed by the Company); (vii) Debt Incurred for the purpose of financing all
or any part of the purchase price or the cost of construction of or improvements
(or additions to improvements) to the property of the Company or any of its
Subsidiaries in an aggregate principal amount not to exceed the fair market
value of such property, construction or improvements (or additions to
improvements); (viii) Debt or Preferred Stock that is exchanged for, or the
proceeds of which are used to refinance or refund, any Debt or Preferred Stock
permitted to be outstanding pursuant to clauses (i) through (vii) (or any
extension or renewal thereof) (provided that such Debt is not Guaranteed by the
Company) (A) in an aggregate principal amount not to exceed the principal amount
of the Debt, in the case of Debt, or the liquidation preference of the Preferred
Stock, in the case of Preferred Stock, so exchanged, refinanced or refunded and
(B) provided that such Debt or Preferred Stock does not require the payment of
all or a portion of the principal or liquidation value thereof (whether pursuant
to purchase, redemption, defeasance, retirement, sinking fund payment, payment
at stated maturity or otherwise, but excluding any payment or retirement
required by virtue of acceleration of such Debt upon an event of default
thereunder) prior to the scheduled maturity or maturities of the Debt or
Preferred Stock being refinanced or refunded; and (ix) Debt not otherwise
permitted to be Incurred
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pursuant to clauses (i) through (viii) above, which, together with any other
outstanding Debt Incurred pursuant to this clause (ix), has an aggregate
principal amount not in excess of the greater of $20 million or 10% of
Consolidated Stockholders' Equity.

Limitation on Liens. The Company shall not, and shall not permit any
Subsidiary of the Company, to incur any Lien on property or assets of the
Company or such Subsidiary to secure Debt without making, or causing such
Subsidiary to make, effective provision for securing the Debt Securities (and,
if required by its governing instruments, any other Debt of the Company or of
such Subsidiary that is not subordinate to the Debt Securities) equally and
ratably with such Debt as to such property for so long as such Debt will be so
secured or, in the event such Debt is Debt of the Company which is subordinate
in right of payment to the Debt Securities, prior to such Debt as to such
property for so long as such Debt will be so secured.

The foregoing restrictions will not apply to Liens existing at the date of
the Indenture or to: (i) Liens on inventories and accounts receivable existing
from time to time; (ii) Liens securing only the Debt Securities; (iii) Liens in
favor of the Company; (iv) Liens on property of a Person existing at the time
such Person is merged into or consolidated with the Company or any Subsidiary of
the Company or any Subsidiary of the Company merges into or consolidates with
such Person and not securing Debt Incurred in anticipation of such transaction;
(v) Liens on property existing at the time of acquisition thereof; (vi) Liens to
secure Debt Incurred for the purpose of financing all or any part of the
purchase price or the cost of construction or improvement (or additions to
improvements) of the property subject to such Liens; (vii) Liens on property of
the Company or any of its Subsidiaries in favor of the United States of America
or any state thereof, or any instrumentality of either, to secure certain
payments pursuant to any contract or statute; (viii) Liens granted to any bank
or other institution on the payments to be made by such institution to the
Company or a Subsidiary of the Company pursuant to any interest rate swap or
similar agreement or foreign currency hedge, exchange or similar agreement
designed to provide protection against fluctuations in interest rates and
currency exchange rates, respectively, provided that such agreements are entered
into in, or are incidental to, the ordinary course of business or are entered
into in connection with Debt permitted by the provisions described under
"Limitation on Subsidiary Debt" above, between the Company or such Subsidiary
and such institution; (ix) Liens to secure industrial revenue or development
bonds, not to exceed $5 million at any one time outstanding; (x) mechanics',
workmen's, materialmen's or similar Liens arising in the ordinary course of
business; (xi) Liens to secure any extension, renewal, refinancing or refunding
(or successive extensions, renewals, refinancing or refundings), in whole or in
part, of any Debt secured by Liens referred to in the foregoing clauses (i) to
(x) so long as such Lien does not extend to any other property and the Debt so
secured is not increased; (xii) Liens incurred in the ordinary course of
business that are not material to the business or financial condition of the
Company and its Subsidiaries taken as a whole and which do not secure Debt in an
aggregate principal amount in excess of the greater of $20 million or 10% of
Consolidated Stockholders' Equity at any one time outstanding; and (xiii) any
Liens securing Debt owed by the Company to one or more Wholly Owned Subsidiaries
of the Company (but only if such Debt is held by such Wholly Owned
Subsidiaries).

Limitation on Sale and Leaseback Transactions. The Company shall not, and
shall not permit any Subsidiary of the Company, to enter into any Sale and
Leaseback Transaction (except for a period not exceeding three years) unless the
Company or such Subsidiary would be entitled to incur a Lien to secure Debt by
reason of the provisions described in clauses (i) through (xiii) of the second
paragraph under the "Limitation on Liens" covenant in an amount equal to the
Attributable Value of such Sale and Leaseback Transaction without equally and
ratably securing the Debt Securities.

Limitation on Merger, Consolidation and Certain Sales of Assets. The
Indenture provides that the Company will not merge or consolidate with or into,
or convey, lease or transfer all or substantially all of its property to, any
Person unless (a) the successor is organized and existing under the laws of the
United States or any State or the District of Columbia, (b) the successor
expressly assumes by supplemental indenture all of the Company's obligations
under the Indenture and the Debt
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Securities issued under the Indenture on the same terms and conditions and (c)
immediately after giving effect to such transaction, there is no default under
the Indenture. In the event a successor corporation assumes the obligations of
the Company, such successor corporation shall succeed to and be substituted for
the Company under the Indenture and under the Debt Securities and all
obligations of the Company shall terminate. (Article 8)

Any additional covenants pertaining to a series of Debt Securities will be
set forth in a Prospectus Supplement relating to such series of Debt Securities.

Leveraged Transactions and Changes in Control. Other than the Limitation on
Subsidiary Debt, Limitation on Liens and Limitation on Sale and Leaseback
Transactions covenants described above, the Indenture and the Debt Securities do
not contain any covenants or other provisions designed to afford holders of the
Debt Securities protection in the event of a highly leveraged transaction
involving the Company. The Indenture does not contain provisions requiring
redemption of the Debt Securities by the Company, or adjustment to any terms of
the Debt Securities, upon any change in control of the Company.

CERTAIN DEFINITIONS

For purposes of the Indenture, the following terms have the meanings set
forth below.

"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount of
rent required to be paid by such Person under such lease during the initial term
thereof as determined in accordance with GAAP, discounted from the last date of
such initial term to the date of determination at a rate per annum equal to the
discount rate which would be applicable to a Capital Lease Obligation with like
term in accordance with GAAP. The net amount of rent required to be paid under
any such lease for any such period shall be the aggregate amount of rent payable
by the lessee with respect to such period after excluding amounts required to be
paid on account of insurance, taxes, assessments, utility, operating and labor
costs and similar charges. In the case of any lease which is terminable by the
lessee upon the payment of a penalty, such net amount shall also include the
amount of such penalty, but no rent shall be considered as required to be paid
under such lease subsequent to the first date upon which it may be so
terminated. "Attributable Value" means, as to a Capital Lease Obligation under
which any Person is at the time liable and at any date as of which the amount
thereof is to be determined, the capitalized amount thereof that would appear on
the face of a balance sheet of such Person in accordance with GAAP.

"Business Day" means, with respect to any series of Securities, unless
otherwise specified in a Board Resolution and an Officer's Certificate with
respect to a particular series of Securities, each day which is not a Saturday,
Sunday or other day on which banking institutions in the pertinent Place or
Places of Payment or the city in which the Corporate Trust Office is located are
authorized or required by law or executive order to be closed.

"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person which is required to
be classified and accounted for as a capital lease or a liability on the face of
a balance sheet of such Person in accordance with GAAP. The stated maturity of
such obligation shall be the date of the last payment of rent or any other
amount due under such lease or other Debt arrangements prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.

"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of corporate stock of
such Person.

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"Consolidated Stockholders' Equity" of any Person means the consolidated
stockholders' equity of such Person and its Consolidated Subsidiaries, as
determined on a consolidated basis in accordance with GAAP, less amounts
attributable to Redeemable Stock of such Person.

"Consolidated Subsidiaries" of any Person means all other Persons that
would be accounted for as consolidated Persons in such Person's financial
statements in accordance with GAAP.

"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, Debt Securities or
other similar instruments, including obligations incurred in connection with
acquisition of property, assets or businesses (even though the rights and
remedies of the seller in the event of a default are limited to repossession or
sale of the property, assets or business), (iii) every reimbursement obligation
of such Person with respect to letters of credit, bankers' acceptances or
similar facilities issued for the account of such Person, (iv) every obligation
of such Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising in
the ordinary course of business (x) which are not overdue by more than 90 days
or (y) which are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and for which a proper reserve or
other appropriate provision, if any, as shall be required in accordance with
GAAP shall have been made), (v) every Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Redeemable Stock of
such Person at the time of determination, (vii) every payment obligation of such
Person under interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements at the time of determination, (viii) every
obligation to pay rent or other similar amounts of such Person with respect to
any Sale and Leaseback Transaction to which such Person is a party and (ix)
every obligation of the type referred to in clauses (i) through (viii) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has Guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise and such obligations secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured) by any Lien on property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligation.

"GAAP" means generally accepted accounting principles in the United States,
consistently applied, that are in effect from time to time.

"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Debt
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including, without limitation, any obligation of such Person,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or to purchase (or advance or supply funds for the purchase or
payment of) any security for the payment of such Debt, (ii) to purchase
property, securities or services for the purpose of assuring the holder of such
Debt of the payment of such Debt, or (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Debt (and "Guaranteed"
and "Guaranteeing" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not include endorsements by such
Person for collection or deposit in the ordinary course of business.

"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
or the recording, as required pursuant to GAAP or otherwise, of any such Debt or
other obligation on the balance sheet of such Person (and "Incurrence,"
"Incurred," "Incurrable" and "Incurring" shall have meanings correlative to the

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foregoing); provided, however, that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Debt shall not be
deemed an Incurrence of such Debt.

"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, deposit agreement, security
interest, lien, charge, easement (other than any title defect or easement not
materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).

"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee.

"Opinion of Counsel" means a written opinion of counsel, who may (except as
otherwise expressly provided in the Indenture) be an employee of or of counsel
to the Company, which is delivered to the Trustee. Such counsel shall be
acceptable to the Trustee, whose acceptance shall not be unreasonably withheld.

"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.

"Redeemable Stock" of any Person means any equity security of such Person
that by its terms or otherwise is required to be redeemed prior to the Stated
Maturity of the Debt Securities or is redeemable at the option of the holder
thereof at any time prior to the Stated Maturity of the Debt Securities.

"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than one year after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other similar amount due under such arrangement
prior to the first date on which such arrangement may be terminated by the
lessee without payment of a penalty.

"Significant Subsidiary" means a subsidiary of any Person that is a
"significant subsidiary" as defined in Regulation S-X, as promulgated by the
Commission.

"Stated Maturity" means when used with respect to any Security or any
installment of principal thereof or interest thereon means the date specified in
such Security as the fixed date on which the principal, such installment of
principal or interest is due and payable.

"Subsidiary" means, with respect to any Person, any corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by such Person, and any partnership, association, joint venture or other entity
in which such Person owns more than 50% of the equity interests or has the power
(i) to elect a majority of the board of directors or other governing body or
(ii) to direct the policies, management or affairs thereof.

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"Voting Stock," as applied to the stock of any corporation, means stock of
any class or classes (however designated) having by the terms thereof ordinary
voting power to elect a majority of the members of the board of directors (or
other governing body) of such corporation other than stock having such power
only by reason of the happening of a contingency.

"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.

DEFEASANCE

The Indenture provides that the Company, at its option, (a) will be
Discharged from any and all obligations in respect of any series of Debt
Securities (except in each case for certain obligations to register the transfer
or exchange of Debt Securities, replace stolen, lost or mutilated Debt
Securities, maintain paying agencies and hold moneys for payment in trust) or
(b) need not comply with the covenant described above under "Limitation on
Merger, Consolidation and Certain Sales of Assets" and any other restrictive
covenant described in a Prospectus Supplement relating to such series of Debt
Securities, and certain Events of Default (other than those arising out of the
failure to pay interest or principal on the Debt Securities of a particular
series and certain events of bankruptcy, insolvency and reorganization) will no
longer constitute Events of Default with respect to such series of Debt
Securities, in each case if the Company deposits with the applicable Trustee, in
trust, money or the equivalent in securities of the government which issued the
currency in which the Debt Securities are denominated or government agencies
backed by the full faith and credit of such government, or a combination
thereof, which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
all the principal (including any mandatory sinking fund payments) of, and
interest on, such series on the dates such payments are due in accordance with
the terms of such series. To exercise any such option, the Company is required,
among other things, to deliver to the Trustee an Opinion of Counsel to the
effect that (i) the deposit and related defeasance would not cause the holders
of such series to recognize income, gain or loss for Federal income tax purposes
and, in the case of a Discharge pursuant to clause (a), accompanied by a ruling
to such effect received from or published by the United States Internal Revenue
Service and (ii) the creation of the defeasance trust will not violate the
Investment Company Act of 1940. In addition, the Company is required to deliver
to the Trustee an Officers' Certificate stating that such deposit was not made
by the Company with the intent of preferring the holders over other creditors of
the Company or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others. (Article 4)

EVENTS OF DEFAULT, NOTICE AND WAIVER

The Indenture provides that, if an Event of Default specified therein with
respect to any series of Debt Securities issued thereunder shall have happened
and be continuing, either the Trustee thereunder or the holders of 25% in
aggregate principal amount of the outstanding Debt Securities of such series (or
25% in aggregate principal amount of all outstanding Debt Securities under the
Indenture, in the case of certain Events of Default affecting all series of Debt
Securities under the Indenture) may declare the principal of all the Debt
Securities of such series to be due and payable. (Section 502)

Events of Default in respect of any series are defined in the Indenture as
being: (i) default for 30 days in payment of any interest installment with
respect to such series; (ii) default in payment of principal of, or premium, if
any, on, or any sinking fund or analogous payment with respect to, Debt
Securities of such series when due at their stated maturity, by declaration or
acceleration, when called for redemption or otherwise; (iii) default for 30 days
after notice to the Company by the Trustee thereunder or by holders of 25% in
aggregate principal amount of the outstanding Debt Securities of such series in
the performance of any covenant in such Indenture with respect to Debt
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Securities of such series; (iv) failure to pay when due, upon final maturity or
upon acceleration, the principal amount of any indebtedness for money borrowed
of the Company in excess of $5 million, if such indebtedness is not discharged,
or such acceleration annulled, within 30 days after written notice; and (v)
certain events of bankruptcy, insolvency and reorganization with respect to the
Company or any Significant Subsidiary. (Section 501 and Form of the Senior
Security)

Any additions, deletions or other changes to the Events of Default which
will be applicable to a series of Debt Securities will be described in the
Prospectus Supplement relating to such series of Debt Securities.

The Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to the Debt Securities of any
series, give to the holders of the Debt Securities of such series notice of all
uncured and unwaived default known to it; provided that, except in the case of
default in the payment of principal of, premium, if any, or interest, if any, on
any of the Debt Securities of such series, the Trustee thereunder will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of the holders of the Debt
Securities of such series. The term "default" for the purpose of this provision
means the happening of any of the Events of Default specified above, except that
any grace period or notice requirement is eliminated. (Section 602)

The Indenture contains provisions entitling the Trustee, subject to the
duty of the Trustee during an Event of Default to act with the required standard
of care, to be indemnified by the holders of the Debt Securities before
proceeding to exercise any right or power under the Indenture at the request of
holders of the Debt Securities. (Section 603)

The Indenture provides that the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of any series may direct the
time, method and place of conducting proceedings for remedies available to the
Trustee or exercising any trust or power conferred on the Trustee in respect of
such series. (Section 512)

The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate of no default or specifying any default that exists.
(Section 1004)

In certain cases, the holders of a majority in principal amount of the
outstanding Debt Securities of any series may on behalf of the holders of all
Debt Securities of such series waive any past default or Event of Default with
respect to the Debt Securities of such series or compliance with certain
provisions of the Indenture, except, among other things, a default not
theretofore cured in payment of the principal of, premium, if any, or interest,
if any, on any of the Debt Securities of such series. (Sections 513 and 1009)

MODIFICATION OF THE INDENTURE

The Company and the Trustee may, without the consent of the holders of the
Debt Securities, enter into indentures supplemental to the Indenture for, among
others, one or more of the following purposes: (i) to evidence the succession of
another Person to the Company, and the assumption by such successor of the
Company's obligations under the Indenture and the Debt Securities of any series;
(ii) to add covenants of the Company, or surrender any rights of the Company,
for the benefit of the holders of Securities of any or all series; (iii) to cure
any ambiguity, or correct any inconsistency in the Indenture; (iv) to evidence
and provide for the acceptance of any successor Trustee with respect to one or
more series of Securities or to facilitate the administration of the trusts
thereunder by one or more trustees in accordance with the Indenture; (v) to
establish the form or terms of any series of Debt Securities; and (vi) to
provide any additional Events of Default. (Section 901)

The Indenture contains provisions permitting the Company and the Trustee
thereunder, with the consent of the holders of a majority in principal amount of
the outstanding Debt Securities of each series to be affected, to execute
supplemental indentures adding any provisions to or changing or
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eliminating any of the provisions of the Indenture or modifying the rights of
the holders of the Debt Securities of such series to be affected, except that no
such supplemental indenture may, without the consent of the holders of affected
Debt Securities, among other things, change the fixed maturity of any Debt
Securities, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or reduce the aforesaid percentage of
Debt Securities of any series the consent of the holders of which is required
for any such supplemental indenture. (Section 902)

BOOK-ENTRY SYSTEM

The provisions set forth below in this section headed "Book-Entry System"
will apply to the Debt Securities of any series if the Prospectus Supplement
relating to such series so indicates.

The Debt Securities of such series will be represented by one or more
global securities (collectively, a "Global Security") registered in the name of
a depositary (the "DTC") or a nominee of DTC identified in the Prospectus
Supplement relating to such series. Except as set forth below, a Global Security
may be transferred, in whole and not in part, only to DTC or another nominee of
DTC.

Upon the issuance of a Global Security, DTC will credit, on its book-entry
registration and transfer system, the respective principal amounts of the Debt
Securities represented by such Global Security to the accounts of institutions
that have accounts with DTC or its nominee ("participants"). The accounts to be
credited will be designated by the underwriters, dealers or agents. Ownership of
beneficial interests in a Global Security will be limited to participants or
Persons that may hold interests through participants. Ownership of interests in
such Global Security will be shown on, and the transfer of those ownership
interests will be effected only through, records maintained by DTC (with respect
to participants' interest) and such participants (with respect to the owners of
beneficial interests in such Global Security). The laws of some jurisdictions
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and laws may impair the ability to
transfer beneficial interests in a Global Security.

So long as DTC, or its nominee, is the registered holder and owner of such
Global Security, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the related Debt Securities for all purposes of such
Debt Securities and for all purposes under the Indenture. Except as set forth
below, owners of beneficial interests in a Global Security will not be entitled
to have Debt Securities represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of Debt
Securities in definitive form and will not be considered to be the owners or
holders of any Debt Securities under the Indenture or such Global Security.

Accordingly, each Person owning a beneficial interest in a Global Security
must rely on the procedures of DTC and, if such Person is not a participant, on
the procedures of the participant through which such Person owns its interest,
to exercise any rights of a holder of Debt Securities under the Indenture or
such action which DTC, as the holder of a Global Security, is entitled to take
under the Indenture or such Global Security. The Indenture permits DTC to
authorize participants, as its agents, to take any action which DTC, as the
holder of a Global Security, is entitled to take under the Indenture or such
Global Security. The Company understands that under existing industry practice,
in the event the Company requests any action of holders of Debt Securities or an
owner of a beneficial interest in a Global Security desires to take any action
that DTC, as the holder of such Global Security is entitled to take, DTC would
authorize the participants to take such action, and that the participants would
authorize beneficial owners owning through such participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.

Payment of principal of and premium, if any, and interest, if any, on Debt
Securities represented by a Global Security will be made to DTC or its nominee,
as the case may be, as the registered owner and holder of such Global Security.

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<PAGE> 69

Upon receipt of any payment of principal, premium, if any, or interest, if
any, in respect of a Global Security, DTC will credit immediately participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Security as shown on the
records of DTC. Payments by participants to owners of beneficial interests in a
Global Security held through such participants will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants. The Company will not have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in a Global Security
for any Debt Securities or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between DTC and its participants or the relationship between such
participants and the owners of beneficial interests in such Global Security
owning through such participants.

Unless and until it is exchanged in whole or in part for Debt Securities in
definitive form, a Global Security may not be transferred except as a whole by
DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC.

Debt Securities represented by a Global Security are exchangeable for Debt
Securities in definitive form of like tenor as such Global Security in
denominations of $1,000 and in any greater amount that is an integral multiple
thereof if (i) DTC notifies the Company that it is unwilling or unable to
continue as DTC for such Global Security or if at any time DTC ceases to be a
clearing agency registered under the Exchange Act, (ii) the Company in its
discretion at any time determines not to have all of the Debt Securities
represented by a Global Security and notifies the Trustee thereof, or (iii) an
Event of Default has occurred and is continuing with respect to the Debt
Securities. Any Debt Security that is exchangeable pursuant to the preceding
sentence is exchangeable for Debt Securities issuable in authorized
denominations and registered in such names as DTC shall direct. Subject to the
foregoing, a Global Security is not exchangeable, except for a Global Security
or Global Securities of the same aggregate denominations to be registered in the
name of DTC or its nominee.

SAME-DAY SETTLEMENT AND PAYMENT

Settlement by the purchasers of the Debt Securities will be made in
immediately available funds. All payments by the Company to DTC of principal and
interest will be made in immediately available funds.

The Debt Securities will trade in DTC's Same-Day Funds Settlement System
until maturity, and therefore DTC will require secondary trading activity in the
Debt Securities to be settled in immediately available funds. No assurance can
be given as to the effect, if any, of settlement in immediately available funds
on trading activity in the Debt Securities.

REGARDING THE TRUSTEE

Texas Commerce Bank National Association is the managing agent for and a
lender under one of the Company's bank credit facilities, dated as of July 21,
1995, as amended, whereunder the Texas Commerce Bank National Association and
eight other domestic banks have agreed to lend up to $200 million to the Company
at any time and from time to time through June 30, 2002. Texas Commerce Bank
National Association has received and will in the future receive fees and
compensation in connection with those and other transactions.

GOVERNING LAW

The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.

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<PAGE> 70

PLAN OF DISTRIBUTION

The Company may sell the Debt Securities to or through underwriters,
dealers or agents or directly to other purchasers. The Prospectus Supplement
with respect to the Debt Securities offered thereby will describe the terms of
the Offering of such Debt Securities and the method of distribution of the Debt
Securities offered thereby and identify any firms acting as underwriters,
dealers or agents in connection therewith.

The Debt Securities may be distributed from time to time in one or more
transactions at a fixed price or prices (which may be changed) or at prices
determined as specified in the Prospectus Supplement. In connection with the
sale of the Debt Securities underwriters, dealers or agents may be deemed to
have received compensation from the Company in the form of underwriting
discounts or commissions and may also receive commissions from purchasers for
whom they may act as agent. Certain of the underwriters, dealers or agents who
participate in the distribution of the Debt Securities may engage in other
transactions with, and perform other services for, the Company in the ordinary
course of business.

Any underwriting compensation paid by the Company to underwriters or agents
in connection with the Offering of the Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to dealers, are set forth in
the Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Debt Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
the resale of the Debt Securities may be deemed to be underwriting discounts and
commissions under the Securities Act. Underwriters and their controlling
persons, dealers and agents may be entitled, under agreements entered into with
the Company, to indemnification against, and contribution toward, certain civil
liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

The validity of the issuance of certain of the Debt Securities offered by
the Company hereby will be passed upon for the Company by Jackson Walker L.L.P.,
Dallas, Texas. Certain legal matters in connection with the issuance of certain
of the Debt Securities will be passed upon for the Underwriters by Cravath,
Swaine & Moore, New York, New York.

EXPERTS

The consolidated balance sheets as of October 31, 1996 and 1995 and the
consolidated statements of operations, changes in shareholders' equity, and cash
flows for each of the three years in the period ended October 31, 1996,
appearing in the Company's Annual Report on Form 10-K, incorporated by reference
in this Prospectus, have been incorporated herein in reliance on the report,
which includes an explanatory paragraph describing the change in the method of
accounting for income taxes in 1994, of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.

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<PAGE> 71

NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION CONTAINED THAT THE INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

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

TABLE OF CONTENTS

<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary S-3
The Offering S-6
Summary Financial Information S-7
Use or Proceeds S-9
Capitalization S-9
Unaudited Pro Forma Condensed Consolidated
Financial Statements S-10
Management's Discussion and Analysis of
Financial Condition and Results of
Operation S-15
Business S-22
Description of Debentures S-34
Underwriting S-39
Financial Statements F-1
PROSPECTUS
Available Information 2
Incorporation of Certain Documents by
Reference 2
The Company 3
Use of Proceeds 3
Ratio of Earnings to Fixed Charges 3
Holding Company Structure 4
Description of Debt Securities 4
Plan of Distribution 14
Legal Matters 14
Experts 14
</TABLE>

Prospectus Supplement

TCA CABLE TV, INC.
$150,000,000

% DEBENTURES DUE 2028

[TCA CABLE TV, INC. LOGO]
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC

STEPHENS INC.
UBS SECURITIES

Dated February , 1998