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SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 05/28/1999
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<PAGE>

                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   Information relating to the Company stock options is as follows:


<TABLE>
<CAPTION>
                                                                    Weighted
                                                                    Average
                                                          Number of Exercise
                                                           Shares    Price
                                                          --------- --------
      <S>                                                 <C>       <C>      <C>
      Outstanding December 31, 1995......................  301,000
        Granted..........................................   33,750   $ 8.82
        Exercised........................................   (7,250)     --
        Canceled.........................................  (35,500)   10.01
                                                           -------   ------
      Outstanding December 31, 1996......................  292,000     8.46
        Granted..........................................   88,013     8.82
        Exercised........................................      --       --
        Canceled.........................................     (375)   10.01
                                                           -------   ------
      Outstanding December 31, 1997......................  379,638     8.82
        Granted..........................................   47,500    31.25
        Exercised........................................  (26,075)   26.21
        Canceled.........................................  (10,250)     --
                                                           -------   ------
      Outstanding November 5, 1998.......................  390,813   $11.52
                                                           =======   ======
        Shares exercisable November 5, 1998..............  155,125   $ 8.45
</TABLE>


   The range of exercise prices for options outstanding at November 5, 1998 was
$8.46 to $31.25.

   No compensation expense related to stock option grants was recorded in 1997.
For the period ended November 5, 1998 compensation expense in the amount of
$161 was recorded relating to services rendered by the Board.

   Under the term of the Merger Agreement the options under the 1997 Plan vest
upon the closing of the merger and each option holder will receive $40.50 per
option.

   Pro forma information regarding net income and earnings per share is
required by SFAS 123, and has been determined as if the Company had accounted
for its stock options under the fair value method of SFAS 123. The fair value
of these options was estimated at the date of grant using a Black Scholes
option pricing model with the following weighted average assumptions for the
period ended November 5, 1998. The fair value of these options was estimated at
the date of grant using a Black Scholes option pricing model with weighted
average assumptions for dividend yield of 0% for 1996, 1997 and 1998; expected
volatility of 39.5% for 1996, 38.6% prior to the Distribution and 49.8%
subsequent to the Distribution for 1997 and 40% for 1998; risk-free interest
rate of 5.95%, 6.52% and 5.68% for 1996, 1997 and 1998 respectively, and
expected lives of 5 years for 1996 and 1997 and 6 years for 1998.

   The weighted-average fair value of options granted during 1997 and 1998 was
$4.19 and $14.97, respectively.


                                      F-68